In recent times, the government’s stated aim of making the pensions system fairer and simpler for all has meant that employers and their workforce need to understand the new regulations.. We recently carried out research to find out what employees understand about the changes and discovered that, while the government’s end goal is to make things clearer, the reality (in the meantime at least) is somewhat different when it comes to pension tax relief.
In the research conducted by Close Asset Management, participants in the sample were asked if they were aware that new legislation has reduced the amount of money they can contribute to a pension each year (effective 6 April this year). Over three quarters of those questioned said ‘no’. Just 6% said they have been offered advice or information on the changes to pension legislation that are taking place. While around a third of respondents believe that the changes will only affect the extremely rich, a further 36% expressed concern that this would affect them, and said they would need to find out more.
Retirement is an ever-complex topic on the agenda for employees, especially as the default retirement age is about to be abolished and final salary pension schemes are in terminal decline. Two thirds of employees are worried that their current pension arrangements will not be sufficient for retirement, while another 25% simply don’t know if they have enough to be comfortable in retirement.
With 21% of employees saying they would be most likely to turn to their employer for advice and information on saving for their retirement, there is clearly an onus on employers to provide a level of financial education, especially as the world of retirement planning gets more and more complex. Providing staff with access to face to face seminars can be a great way of making sure they are equipped with the knowledge they need to make the right decisions for themselves.
Jeanette Makings, Director - Financial Education Services, Close Brothers
Jeanette joined Close in 2000 and has held a number of roles including heading up our marketing team, prior to her current role leading the team that works with employers to deliver our financial education services.
Against the backdrop of the growing importance that many employers now place around employee engagement, Jeanette has expanded and enhanced our financial education services enabling more employers to access them and so differentiate their employee offering and demonstrate the value they place on developing and supporting their people.