According to a survey published this week by Wealth at Work, 60% of respondents also believe there will be an increased requirement for specialist retirement advice because of the various regulation changes.
Only 21% believe their employees are saving enough for retirement and, as a result, 85% will provide some sort of support through a combination of communications and/or ?nancial education and/or advice.
The survey shows 40% of respondents operate both defined benefit and defined contribution pension arrangements.
The introduction of auto enrolment will no doubt be viewed as an unwanted government legislation by many companies and their employees, particularly in the current economic environment where budgets are stretched. Respondents provided a mixed response with the majority 52% predicting that auto enrolment will be greeted both positively and negatively by employees.
Almost all respondents expect the various legislative changes to impact on their existing pension schemes, with 28% anticipating a significant impact, whilst 61% believe there will be some impact.
Most significant will be the introduction of auto enrolment where employers will need to ensure existing pension provision complies with the new legislation. More than eight out of ten respondents (85%) will be providing some form of support in response to the various legislative changes, which ranged from offering financial education and advice to written communications.
The removal of the default retirement age will see many choose some form of flexible retirement where they may take part of their pension benefits yet remain in employment, possibly on a part time basis. More than half (49%) of respondents already make this available to employees with a further 21% intending to do so. Yet, the remaining 30% do not intend to offer flexible retirement. The option to continue in work will help those who wish to continue saving for retirement beyond traditional retirement age which is likely to be out of necessity for some.
Jonathan Watts-Lay, director, Wealth at Work, said: "It is now critical that firms offer financial education to their staff at retirement to ensure they understand the various retirement income options available. This should be supported by advice to ensure employees make the right decision for what is increasingly becoming the most critical financial decision during their life. This will allow them to plan adequately - especially as selecting an annuity or the wrong annuity is an irreversible decision and if not suitable, could have a detrimental impact on an individual's financial well being for the rest of their life. The new drawdown rules make this decision even more complex".
He adds, "Employees must now rethink their retirement and be supported by their employer in doing so, with access to comprehensive financial education and specialist advice. It is simply wrong to encourage pension saving in the workplace but then to abandon employees when they need to make life changing decisions with their pension pot. However, the good news is many companies are now realizing this and taking action. Our experience shows that this is what employees really need and often don't know where to turn. Retirement planning enables them to make the big step into life in retirement and become independent from their employer."
