With changes afoot throughout the pensions industry, there is a need for better education for employers and members of pension schemes, according to The Pensions Trust
The Pensions Trust questioned 500 members and employers on their key pension concerns, with confusion around options in the lead up to retirement as well as options in retirement prevailing as a main theme. The poll found many members were unclear as to whether they could stop working before they reach 65, and still draw their pension, as well as confusion around their options if they decide to continue working past 65 years of age. Similarly, members were troubled as to their options when it comes to drawing both a private and a State Pension, with some questioning whether they are still eligible to draw a State Pension if they draw from a private pension. Further confusion also lies around the issue of how much people can take as a tax free lump sum, as well as their options on drawdown when they reach retirement.
Sarah Smart, Chair of the Trustee Board, said: “In his Budget, George Osborne announced changes that will significantly impact the way the pensions industry operates going forwards. As an organisation, we have welcomed these changes as they will provide more choice for people, and for most people a better quality retirement. A core initiative announced by the Chancellor was the proposal for free, impartial face-to-face guidance introduced for pensioners, and as our research shows, this could not come soon enough as confusion clearly prevails among those heading into or at retirement.
“While saving solutions in retirement will be very different for every individual, as it is dependent on their own circumstances, we expect that most people will want to look at some sort of financial product during retirement, rather than just taking it all. As such, advice is key, and it is essential members understand their options and that there is a market out there. If an individual needs to buy an annuity, for example, it’s in their interests to look at all the options on the market. To date they haven’t been doing this. The Pensions Trust’s process includes this for free, and hopefully, with the introduction of the Government’s pension advice service, more people will receive the guidance they need to help them on their journey into retirement.”
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