Get the best pension guidance
Why is it becoming more important for people to get help from a trusted source when making decisions about accessing their pension savings?
Richard Williams: An increased choice in defined contribution (DC) pension schemes has provided greater flexibility for DC members, and for members of defined benefit arrangements. But these new options have created challenges: members risk sleepwalking into a scheme that doesn't suit them. For one thing, the shape of retirement is changing. We are also seeing a change in working patterns. Many members are looking to phase into retirement, rather than suddenly swapping from a salary to a pension. None of this matches the shape of income from a defined benefit scheme, which means that some members will need to transfer to take advantage of a flexible income to complement their part-time earnings. Given all of this, providing staff with robust financial guidance is very important. This could range from information hosted on an intranet site to telephone conversations. It can be detailed and personalised, but stops short of recommending a specific action. After that, members who want to access more flexible schemes will need regulated advice from a financial adviser.
What research have you done to suggests that employees need more support at the point of retirement?
We recently conducted a survey of 2,000 individuals aged 50-65 who have pension savings with their employer. The results were striking: 39% of respondents couldn't estimate the value of their retirement savings. Given this statistic, and the fact that the average person in the UK can expect to change jobs 12 times during their career, it's unsurprising that people need support in understanding their pensions. Guidance is a good way for scheme members to improve their understanding of the options available, especially for people with more complex financial circumstances. A 2017 report by Aegon showed that individuals who took financial advice made about £40,000 more in assets than those who didn't. As 65% of people would like to see retirement planning advice become part of their benefits package, it's important to look at how people are supported throughout their working life to make the best financial decisions.
How have you been working with the public and clients to understand their pension concerns?
This year, we worked alongside Pension Geeks, Scottish Widows and NEST on the annual Pension Awareness Tour to promote retirement awareness around the country. We visited key business areas to provide guidance and practical tips to members of the public. In October 2017, we set off on a bespoke bus to discuss our Pensions Decision Service (PDS). We met some key clients to help answer their pension questions. Our tour ended in Manchester to coincide with the Pensions and Lifetime Savings Association's annual conference.
How does the Pension Decision Service help scheme members?
Members receive their retirement pack six months before their normal retirement date, or on the request of an early retirement date. This pack explains the member's pension options and provides a telephone number to speak to their dedicated retirement relationship manager (RRM). The RRM is available to provide guidance as many times as the member requires. On average, a call lasts around 45 minutes, or as long as the member needs to enable them to make an informed choice about the option that offers them the best outcome. If the member needs to transfer to a DC product, they will need to obtain full regulated financial advice. This can be provided by our JLT Wealth Management team or an adviser from unbiased.com.
What plans do you have going forward?
As educating members dramatically helps them to make informed decisions, we are developing communication packages that employers and trustees can use to provide their staff with information earlier in their employees' retirement journey. We are looking at how we can develop some pop-up clinics to support members in person, and hope that we can follow the success of the PDS Tour in 2018.