The research found that only 43% of employers plan to offer a drawdown option as part of their pension plan. As well as implementation and management, employers also cited governance issues (59%), no desire from the business (53%), and cost (45%) as barriers to adoption.
This is despite around 44% of pension scheme members reaching the age of 55 in the next 10 years wanting to take advantage of the new drawdown freedoms, according to the research.
Fiona Matthews, managing director of LifeSight, said that the issue of people wishing to access their pension pots flexibly is a “major challenge” for pension providers and employers.
“Our survey shows a significant demand from employees to use drawdown for some or all of their pension benefits,” she said. “However, many employers and trustees have been slow to respond as they have been careful to balance giving people what they want with mitigating risk.”
The LifeSight research also found that more than half (51%) of trust-based schemes have not rolled out targeted communications to members aged over 55 since the new pension rules came into effect.
Jackie Wells, head of policy and research for the National Association of Pension Funds?, said that its recent report, Pension Freedoms: Breaking the Deadlock, found that employers were aware of strong appetites among savers for such communications. But employers themselves have often lacked sufficient information to pass on, she added.
“Pension schemes were acutely aware that there were members who would need support,” she said. “Nearly all funds (96%) with DC [defined contribution] schemes thought that their members would either need a lot or a moderate amount of support to navigate pension freedoms.
“[But] schemes have faced a lack of information on the detail around new legislation and regulation. They are still trying to assess what their members may choose to do, and communicate to the members the complexity of these changes.”
Matthews added: “Regular, consistent communication is crucial – trustees must ideally engage with members many years before retirement and, most crucially, with those now aged over 55 to ensure that they are fully informed and empowered.”
