1. Provide financial education and guidance

The first step is to provide financial education and guidance. This can help to gain a fuller picture of sources of retirement income, develop an understanding of the tax implications and what to look out for when it comes to pension scams.

We find that seminars are a very effective method of improving understanding. This is based on the analysis of hundreds of thousands of responses from seminar attendees who have rated their learning from such interventions. This can then, if necessary, be supported with helplines, interactive tools, digital nudges and modellers.

For some employees and pension scheme members (such as those working remotely or deferred scheme members), seminars may be difficult to facilitate, therefore our ‘financial guidance at-retirement service’ is increasingly popular as it provides a telephone based service. Using a structured set of questions and prompts, our telephone based guidance team will discuss scheme specific options and the relationship to other lifetime savings with employees and members, and if further support is required they will signpost to Pension Wise or regulated financial advice. A written report is created for employees/members and employers/Trustees will receive confirmation to record that a retirement guidance session took place. This service meets the Pension Regulator’s and FCA’s requirements to provide risk warnings for employees and scheme members.

Financial education and guidance also acts as a prompt for action, as it can help individuals to think about their next steps, including being able to consider all the things that they may not have thought of before, such as being able to decide if they need further support in the form of regulated financial advice.

2. Promote the importance of regulated financial advice

Many people are concerned about the cost of regulated financial advice without realising that it could actually save them money in the long run. Studies have shown that those who take financial advice are more likely to increase their wealth than those who do not.

As well as providing individuals with a plan tailored to their needs, regulated financial advice also provides the benefit of added consumer protection for the advice given and can prevent costly mistakes from being made. It’s therefore important to ensure employees and members understand the importance of regulated financial advice.

3. Help with the implementation of retirement income options

The next step is to ensure that they can implement their chosen retirement income option(s) – whether that is an annuity, income drawdown, cash withdrawal or a combination of options. As individual needs change over time, support will also be needed throughout retirement.

4. Bring in a provider

An increasing number of employers and Trustees are now turning to specialist retirement service providers to help achieve good outcomes at-retirement. Taking an active approach and supporting employees and members with the help of reputable firms, will make the whole process far more robust, as well as helping them to make the most of their life savings.