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Neglecting employees at retirement could cost them thousands of pounds
31st July 2013
It is increasingly acknowledged that one of the biggest financial decisions most individuals will make in their life is how they will maximise income at retirement. This is so important as making a poor decision could cost an individual thousands of pounds.
Many not only have a number of pension pots but often have other investments which may need to go towards funding an income in retirement. When you add to this, the various options available for taking retirement income such as annuities, drawdown and phased retirement it is no wonder many individuals need support and guidance.
Pressure is now mounting on employers to help resolve these issues. Recent research conducted by the NAPF (National Association of Pension Funds) confirms this. It was found that for members of Defined Contribution (DC) pension schemes, a key factor influencing those about to retire is how they choose to take their pension income and their ability to choose the right income option at retirement.1
The report also includes latest research from the ABI (Association of British Insurers) which shows that whilst two thirds (63%) of annuity purchasers stated that they shopped around and considered switching provider, only 30% had actually switched provider, and only 50% had approached other providers to discuss annuity products or gather quotes. The NAPF go on to point out that this is of “serious concern”. 2
Jonathan Watts-Lay, Director, WEALTH at work, “Many individuals don’t consider all of their investments including pensions, shares and savings at retirement. And not only that, are often unaware of the various retirement income options available, choosing an annuity without shopping around and without full consideration or understanding of other solutions.”
He adds, “Choosing the right retirement income option is so important as making a bad decision at this point can result in a considerably lower income throughout retirement which is of serious concern, especially when it could be so easily avoided. Employers must ensure financial education and advice is provided in the workplace as not providing this could have such a detrimental effect costing employees many thousands of pounds”.
Notes to editors:
NAPF: Supporting DC savers at retirement: an analysis of the advice and brokerage market
1. Page 5
2. Page 20
Please see ‘Neglecting employees at retirement could cost them thousands of pounds’ to download the press release.
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