Almost two thirds of employers think they should bear the cost of additional support and advice needed to support the Government’s ‘freedom and choice’ reforms, according to research from JLT Benefit Solutions.
In its response to the Treasury’s freedom and choice in pensions consultation JLT says advice and assistance can best be delivered through the workplace by intermediaries.
The firm’s research found 63 per cent of employers think that the cost of additional support and advice should be borne by employers although, 35% are only in favour if these costs attract tax relief.
The majority of employers – 69 per cent – believe that, to ensure impartiality is not compromised, providers should outsource the delivery of guidance. Only 19 per cent of employers thought that individuals should pay for this additional support and advice. The research also found 60 per cent of people are indifferent to or actively resist financial advice.
It also found a quarter of employers would amend their pension scheme’s rules to allow flexible retirement and a quarter would not. The rest either already offer flexible retirement or respondents answered ‘don’t know’, which suggests that employers are still deliberating over their responses to these changes.
Mark Wood, Chief Executive, JLT Employee Benefits, comments on these findings: “There is clear evidence that individuals need more support and guidance around their retirement planning and education has to play a key part in helping the industry tackle this challenging issue. Whether this is provided via the State, the pension provider, the employer or all three, remains to be decided. Our research shows there is an inherent reluctance to consult an adviser, which we believe is due to a fragmented British pensions market and the perception that paying for financial advice is only worthwhile if you are a high-net-worth individual.
“Given the apparent willingness on the part of UK plc to co-fund guidance for employees, JLT believes guidance would be best structured by utilising the efficiencies of technology and providing educational material from age 55 via an agreed contract with the employer. Providing bite-sized educational pieces and modeling tools will allow individuals to make an informed choice when they are asked to assess the options they face at retirement. This coupled with the availability of full advice, if required, will provide the individuals with the best possible outcome with regards their retirement.”