- 44% of employers say staff have already made enquiries about transferring from a DB to a DC scheme
- 27% think staff will turn to them for info on the pensions reforms
- 21% are looking to give their employees help in making informed pension decisions
The new pension freedoms allow far greater choice and flexibility in accessing pension pots for those in defined contribution (DC) schemes. As a result, more DB pension savers are reviewing their options to transfer out of private sector defined benefit (DB) to DC schemes. Almost half of employers have noted employee enquiries on the subject already, according to the latest research from Close Brothers Asset Management.
The Close Brothers Business Barometer, which questions over 400 employers across the UK, found that 44% of employers say staff have made enquiries about the transfer, with over one in ten (11%) saying this was a ‘significant’ number.
When it comes to those already in DC schemes, to help guide staff through the changes and make informed choices, over half (57%) of employers are either already offering employees help, or are planning to help them make more informed decisions in the future. However, over one in five (22%) admitted they were not aware of the increased choices now offered to their staff, meaning they are as yet unprepared for an increase in the volume of enquiries.
While the Government’s Pension Wise service offers free generic guidance for DC pension members looking to understand these new freedoms, just 23% said they believed their staff would turn to this for information on the reforms, whereas over a quarter (27%) said they expected their staff to ask them for help. 28%, meanwhile, said they thought employees would seek specialised advise from a financial adviser.
Jeanette Makings, Head of Financial Education Services at Close Brothers Asset Management, said: “With so much choice ahead of them, it is natural that staff will turn to their employers to help them navigate the new world of retirement. Providing financial education to enable DC members to make better informed decisions is a good solution and need not be an overwhelming prospect for businesses, nor a strain on their resources. For DB members considering a transfer, education on its own is not enough as members will need to take one to one financial advice with an FCA regulated adviser. However whilst DB transfers will only ever be appropriate for a small number of people, education can help identify when this may be suitable and the risks and benefits associated with a transfer.”
On a regional level, more employers in the North East than any other region (16%) have seen a ‘significant amount’ of staff make enquiries about transferring out of a DB scheme, but 8% of employers in London and Scotland report the same.
Close Brothers Asset Management has now launched its At Retirement service to help employers provide relevant support to their people. This includes an ‘At Retirement’ version of its ‘Money Talks’ online education platform to match the growing demand from employers for extra support for their staff and includes education about the new retirement options as pensions freedoms take effect. The Money Talks platform is also designed to support employers looking for new ways to support their staff in long-term financial planning, including will and estate planning. Online education and support via Money Talks involves a bespoke financial education service for employers, including face to face guidance, seminars and financial advice.