Calls for employers to pay for pension advice

Calls for employers to pay for pension advice

Pension experts have called for legislation to allow employers to recommend and pay for advisers to help employees make decisions around pensions.

A report by law firm Eversheds Sutherland, published yesterday (February 13), showed a wishlist compiled by senior pension professionals to ensure a better retirement for savers.

One of the solutions in the top five included a call for employers to provide IFAs to their employees when they are in need of advice on their pension pots.

Out of the 350 participants who were then surveyed on these proposals, 33 per cent agreed this would be a good idea.

Popular measures identified by the research also included a requirement to make annual pension statements show the actual income expected at retirement and for the development of the pensions dashboard to be sped up.

Pension experts also wanted to see auto-enrolment extended to the self employed and for an independent pensions commission to be established to direct pension strategy and implement reform.

Eversheds Sutherland explained any collaborative approach on pensions needed to be conducted outside the realms of government. This is where an independent commission could be beneficial.

The report stated: “[A commission] would ensure that the pensions and tax framework remains stable and is not adjusted to meet short-term economic or political needs, and that the needs of all parts of society are addressed.”

Other proposals further down the list included the development of online financial advice tools which can make personalised recommendations to savers and to remove the opt out option from auto-enrolment.

Jon Page, director at Neon Financial Planning, said: “I think it's clear that people need more guidance and information about pensions. They are still a bit of a mystery to most, maybe because they are still a little unloved, but they are a vital part of life planning. 

“Auto enrolment has been a great start, but further encouragement to save and be in control of your life can only be a good thing.

“I understand that employers may not initially be willing to pay for advice, but it’s likely to be fairly straightforward so there is no reason the cost couldn’t be kept at a sensible level. 

“It could be seen as a real positive step for employers to have an expert at hand for their employees to reach out to – they could free themselves of the burden of dealing with employee queries, whilst promoting a culture of financial wellbeing leading to better employee attraction and retention.”

Francois Barker, head of pensions at Eversheds Sutherland, said: “The ‘innovation checklist’ of ideas makes for particularly interesting reading as these are some of the solutions, if correctly implemented, that will make the future of pensions a better place for all of us. 

“Without a combined effort to tackle these issues by both government and society, whole generations face the threat of simply not being able to enjoy an affordable retirement.