One in six employers say their staff are still confused about the new pension freedoms, over six months after they were introduced.
Asked what level of understanding their employees had when it came to the changes – which give savers more flexibility than ever before as to how they access their pension – and how it affected them, 17 percent believed most of their staff are still in the dark. While one in five (21 percent) did say their workforce had a good understanding, and a third (33 percent) a limited understanding, it still leaves a knowledge gap where savers may not be taking advantage of the new flexibilities available to them.
The Close Brothers Business Barometer, which surveyed almost 900 employers across the UK, also found that the preference in who employees are turning to has evened out. In July, Pension Wise was more popular than both employers and advisers when it came to individuals looking for more information, despite them having a lack of understanding around what the Pension Wise service actually provides. However, three months on and an equal number are now turning to employers, advisers and Pension Wise.
Looking for help from their employer is more popular in bigger businesses, with just 10 percent of the smallest organisations (with a turnover of less than £500,000) finding they were receiving enquiries from staff, compared to over a quarter (26 percent) of those for the largest (with a turnover of £10 million or more).
According to employers, a small percentage of people are also turning to their own research and family and friends for help. 14 percent said their staff are using the internet to improve understanding around the pension reforms, while 12 percent are talking to family and friends, compared to 12% and 10% respectively three months ago.
Jeanette Makings, Head of Financial Education Services at Close Brothers Asset Management, said: “There is clearly still a lot to be achieved when it comes to ensuring employees are well informed about the pension reforms and the impact on their financial decisions. There is an encouraging number of companies who feel their workforce has a good understanding of the choices they need to make, but there are still many who remain confused or who only have ‘limited knowledge’ and that is a concern.
“Lack of communication around the issue may stem from a concern that introducing a financial education programme will eat up resources, but this isn’t the case. Employers, with their knowledge of staff’s individual financial circumstances, can play a vital role in raising awareness and helping them make well informed decisions, so even small steps to help will make a huge difference. And it’s not just employees that will benefit: there are real returns for the business too in terms of enhanced engagement, improved financial wellbeing and increased productivity – all helping to make a difference to the bottom line.”
Robert joined the HRreview editorial team in October 2015. After graduating from the University of Salford in 2009 with a BA in Politics, Robert has spent several years working in print and online journalism in Manchester and London. In the past he has been part of editorial teams at Flux Magazine, Mondo*Arc Magazine and The Marine Professional.
