23rd May 2016
The pension freedoms changed the face of retirement income options for members of defined contribution (DC) schemes. And one year on, there has been little innovation in the market in terms of new retirement products. However, many are expecting an influx of offers now that the market has had time to adapt.
Jonathan Watts-Lay, Director, WEALTH at work, a leading provider of financial education in the workplace, supported by guidance and advice, raises concerns over individuals blindly purchasing retirement products, new or old, without really understanding what they’re buying and the implications of doing so.
He comments, “The new world of freedom and choice means that individuals must now think about their finances – not just in terms of their pensions, but all of their savings such as; ISAs, shares and any cash savings plus that of their partners. They then need to consider their tax status, health, how long they think they will live, what property they own, and any possible inheritance etc. This demands an all-inclusive approach which looks at all of this. Then individual savers should put together a well thought out plan, rather than simply purchasing a one off retirement product as a source of retirement income, which could have dangerous consequences if not carefully considered. But firstly to do this, individuals need to understand what their retirement options are.
Watts-Lay continues, “Our latest survey* found that 58% of employers offer their staff financial education at the point of retirement, so that they understand the various retirement choices available to them, and the implications of decisions made. It also found that nearly half offer access to regulated advice at retirement. This is a crucial step in making the right retirement choices, based on an individual’s unique personal circumstances. We urge individuals to check with their employer to see what help is available.”
*All statistics quoted are from the WEALTH at work: Pension Changes Survey – Our Survey Results 2015.
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*WEALTH at work and my wealth are trading names of Wealth at Work Limited which is a member of the Wealth at Work group of companies.