Pension changes: an important conversation

5th September 2014

Jonathan Watts-Lay, Director WEALTH at work, comments on the pension changes with Workplace Savings and Benefits:

“The view I hold is that I explain it as auto-enrolment. the legislation ultimately said employers had to offer a pension and rules were put in place about what schemes had to do to comply. Schemes then took a view on how they would comply with it.”

“With larger companies, many didn’t have to do anything whereas some smaller employers didn’t even have a pension scheme in place. Some providers thought they wouldn’t be able to supply the smaller companies and so we got NEST. We think the guidance guarantee could go a similar way. There are firms our there that are already offering guidance and they will do far more then minimum standards. It will be different to the bottom end where there will need to almost default options. It is up to employers to work what the want to offer.”

“The figures say there are approximately 400,00 people retiring from DC pensions every year and the Treasury is talking about advising these people and this is what is confusing. The intention is to give guidance not advice. It will take people through the options and spell out the pros and cons. They could then go on to do regulated advice after that. We think that even if you were offering hour-long seminars, for say, 30 people at a time and all 400,000 people attended one then we would probably only need to have to recruit about 20 more people to satisfy this need.”

“You could give people a number of different ways to engage depending on whether they work shifts. For instance, you could use webinars, Skype, the phone and so on. As long as the content is consistent then why not offer people the choice? It is much more doable than people think. We know this because we do it all the time.”

“There is significant human and emotional pressure here – how can we support people through this? The guidance guarantee is good but we need to be able to give people more. The countdown to retirement takes about seven to ten years and people need to be engaged at this point to ensure they think about what they want from retirement in advance.”

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