7th January 2015
Seven out of 10 employers have taken no action regarding the new Freedom of Pensions rules set to come into force in three months time, a survey has found.
A study by Jelf Employee Benefits, which questioned 250 employers found that there has been little action and there is scant awareness among staff and bosses regarding the huge changes which will allow the over-55s to cash in all their defined contribution savings to spend as they see fit.
Seventy percent of employers questioned have yet to take any action with regard to the proposals Furthermore, only 7% of respondents have both reviewed their offering and sent employee communications to explain the impact of this regulatory change.
The survey also shows that savers in pension schemes may not yet fully understand the new flexibilities. Despite the high media profile of this policy following the announcements last year, only 8% of employers have received any approach from their employees on this important topic.
Steve Herbert, of Jelf Employee Benefits, said: “This is probably the biggest single change to the pensions landscape in a lifetime – and is supposedly driven by the desire of savers to have much greater access and flexibility regarding their retirement savings. Yet awareness of this issue currently seems frighteningly low.
“We are concerned that both employers and employees need to be better educated on this important topic. Without such education many older employees could make ill-informed decisions regarding their pension savings. We are also worried that criminals may see this lack of knowledge as an opportunity to create new pension scams with the express aim of separating employees from their retirement funds.”
However, the survey did reveal that employers are supportive of the announced changes, with 63% welcoming the proposals. But, more than half of this group are also concerned about potential increased administration and employer costs.
Only 15% of employers do not welcome the change of legislation.
Herbert added: “Our survey suggests that the proposals are broadly being welcomed, but it is really important that employers review their offering and communicate the changes to their workforces. And with only three months remaining until full implementation the time for action is now.”