Seven out of 10 pensions professionals do not believe DC members achieve good outcomes at retirement and 95 per cent do not understand the income uplifts available for health conditions, new research shows.
Four out of five pension professionals believe that the average DC member does not understand their company pension scheme, while 55 per cent do not believe that DC members know where to go for advice, according to the research carried out by Echo Research through interviews with consultants, trustees, providers and advisers.
The survey found 85 per cent of pensions professionals believed the reason why employees did not understand their DC schemes was a ‘lack of education about pensions in general’, 74 per cent point to ‘apathy among members’ and 66 per cent said ‘inertia among members’.
But only 20 per cent of professionals say that decumulation is one of the tasks that they spend most time on, compared to 40 per cent who say that administration is one of the tasks that they spend most time on. 43 per cent said that decumulation is one of the tasks to which they devote least time.
Of respondents to the survey, commissioned by enhanced annuity provider Partnership, 83 per cent of pensions professionals cite “access to good quality advice and guidance” as top success factor affecting quality of retirement income outcome among employees, with 73 per cent listing ‘buying annuities smartly’ and 70 per cent ‘shopping around’.
Andrew Megson, managing director of retirement at Partnership says:“Inevitably there will be a significant change of culture as more company pensions schemes move from final salary to money purchase schemes. This will progressively affect more and more people. This research shows the significant issues that pensions professionals must now grasp as a matter of urgency as they seek to meet their responsibilities to members at retirement.”
“One result is that the retirement decision is a lot more involved and it is quite clear from these pensions professionals that Trustees need to focus more in the process of retirement and to ensure that members are engaged and have appropriate access to guidance at the right time.
“If not, scheme members will suffer significantly reduced retirement incomes and, in particular, those who qualify for enhanced annuities for reasons of health and lifestyle – and who can typically benefit by increased retirement income of up to 40 per cent. We must grasp this issue now. The good news is that there are many quick solutions which can help them now.”