Closing the advice gap is crucial to preventing poor outcomes, as the need for savers to be educated about what will be necessary for retirement and the risks they face has increased.
Speaking at a seminar at the Pensions and Lifetime Savings Association this week, Bill Mexson, pensions technical manager at technology company Siemens, said the company provided resources to members, but often the need to use the resources was lost on them.
It’s all very well us providing the wherewithal for someone to do this themselves, but they’ve got to know what to do
Bill Mexson, Siemens
“It’s all very well us providing the wherewithal for someone to do this themselves, but they’ve got to know what to do,” said Mexson. “They’ve got to know what will meet their needs most.”
Pensions guidance underused
He added: “We’ve got the traditional retirement education courses, and they can start a good while before retirement. An individual must choose to go. We’ve got something called a learning portal… it’s down to the line manager to authorise the expense.”
He said a “tiny proportion” of people chose to use the portal.
“We recognise in Siemens that we’ve got a lot of work to do to encourage people not just to engage with all of this but to engage with the learning as well, to find out what they should be doing.”
Houses a 'critical part' of lifetime savings
Mexson said that while pensions will play a role in future saving, there were still questions around how large a role it would play relative to other products and vehicles.
“Being realistic, I’m afraid houses will be a critical part of our future for lifetime savings, and through the workplace we can help. We can help by being prepared to recognise what someone pays in mortgage as being a contribution towards their future, and so offering some kind of matching in the contribution.”
Unilever launches guidance tool, but fear of giving advice still stops many
The Unilever Pension Fund has introduced an online initiative using example members to help savers plan their benefits, ahead of a clarification on the distinction between advice and guidance from the Financial Conduct Authority, Treasury and the Pensions Regulator.
The increasing diversity in the options available, such as the freedoms, the lifetime Isa and the secondary annuity market, will increase the need for education, guidance and advice, said Caroline Escott, senior policy adviser at the Association of Professional Financial Advisers.
“There’s more choice but there’s also potentially greater confusion. As a result, we think the future is going to see an increase in people’s need for some kind of financial help.”
Employers have to invest more in pensions education
Jim Cowan, head of benefits at RBS Group, said employers face a challenge to ensure members are given simple options in an uncertain regulatory landscape.
“For me, the big elephant in the room is: what is the government going to do next?... [There are] so many mixed signals… and that has been a difficulty in terms of choice.”
He added: “It puts a big onus on employers who are probably now going to have to invest perhaps more heavily and certainly more cleverly in education… But apart from that, as employers I think we need to do something around keeping it simple.”
