Round Table: Your money, your choice

1st April 2015

Jonathan Watts-Lay, Director, WEALTH at work comments to Pensions World on the new pension freedoms.

Jonathan Watts-Lay says: “There is pent up demand from people who, pre-Budget, would have taken an annuity and didn’t. You have to assume they are waiting for April, which has created a ballooning effect.”

He continues, “Schemes need to really concentrate on the process to ensure that members are clear about the new flexibilities. In my view, schemes should not necessarily be worried about offering all the new flexibilities in the scheme, but about the process and communications to ensure employees understand the flexibilities available and how they can be accessed.”

Watts-Lay says “Employees do need to understand the pros and cons of each option under the new flexibilities. One area where some employers have a real problem is when employees take cash from their scheme, but continue working for the company. This is because they gave generous contributions to their employees for the purpose of funding retirement, and not to supplement their income while they are still in work.”

He says, “A lot of people have issues about non-advised drawdown. What are these people going to invest in? While investing in cash for 25 years is not good, investing in equities just before the market drops by 50% does not sound like a good solution either.”

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