Only 18% of 40-65 year olds have taken financial advice from a professional, while only 29% said they had received enough support from their employer to manage their pension savings.
The majority of middle-aged Brits are set to enter retirement with inadequate savings and little understanding of what is required to fund their lifestyle. To address this growing problem, JLT Employee Benefits today launches its Pension Decision Service. This service will ensure that employers and trustees will be able to help pension scheme members receive the required level of support and guidance to better plan and save for their retirement.
Pension Decision Service is an enhanced pensions guidance platform designed for employers to offer employees the chance to engage with their pension savings in a simple and cost effective way. This service will include such function as: looking at risk criteria and fund selection, discussing retirement expectations and providing projections of people’s ‘at retirement’ savings. At the heart of this service is personal contact. JLT has created a new role to reflect this - the Retirement Relationship Manager (‘RRM’) - who will act as the first point of contact and reference without automatically escalating to costlier regulated advice.
In conjunction with the launch of Pension Decision Service, JLT conducted a nationwide poll to assess the current level of understanding and attitudes amongst 40-65 year olds with regards to their pension savings.
The survey reveals a significant lack of engagement in pensions. 40% of 40-65 year olds cannot estimate what their total pension savings will be at retirement. Worryingly, over a third (36%) of 60-65-year olds do not know the size of their pension pot, despite nearing retirement age.
Inadequate knowledge of their pension pot is further exacerbated by the alarming gap between expectation and reality when it comes to retirement savings and income prospects. Two thirds of 40-65 year olds with retirement savings under £250,000 say that the state pension will represent less than half of their retirement income. This is despite £250,000 of retirement savings being likely to fall short of providing £159.55 per week – the current full state pension.
Fourteen per cent of people admitted they simply don’t know what proportion of their final retirement savings that the state pension will represent.
Only 29% of those that took part in the survey said they had received enough support from their employer to manage their pension savings, with around two-thirds (65%) saying they would welcome retirement planning as a workplace benefit.
Richard Williams, Director, Pension Decision Service, JLT Employee Benefits, said: “We are in the grips of a mid-life pensions crisis. Our research appears to show that talk of a pensions time bomb is not greatly exaggerated. Indeed, the yawning gap between expectation and reality when it comes to retirement savings for 40-65 year olds is a real societal concern. There are millions who are approaching retirement relying too heavily on inadequate pension pots to fund their twilight years. We fear that they are sleepwalking into potential impoverishment.”
Despite not knowing the value of their pension pot, 71% of respondents have done some financial planning for retirement. However, only 18% have taken this advice from a professional. Lack of information provided to those nearing retirement was a key theme in the results. More than half of respondents (54%) claim that they have not received enough information around retirement planning throughout their working lives.
Continuing, Richard Williams, Director, Pension Decision Service, JLT Employee Benefits, said: “It is clear that those aged 40-65 want more financial guidance and would like this to come from their employer. Since Pension Freedoms were introduced in April 2015, a greater onus has been placed on the employer to provide advice to employees when it comes to accessing their pension savings. Pension Decision Service helps employers proactively engage employees to navigate through the complex decisions.
“The pensions industry and employers alike need to take responsibility for providing greater financial education to corporates and employees. It is particularly important that younger members of the workforce are engaged with their finances at the earliest possible stage in order to kickstart a savings mindset. This is vital in ensuring people have decent pensions to draw upon when they retire.”
JLT Employee Benefits
PR Manager, JLT Group
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NOTES TO EDITORS:
About Jardine Lloyd Thompson
Jardine Lloyd Thompson is one of the world’s leading providers of insurance, reinsurance and employee benefits related advice, brokerage and associated services. JLT’s client proposition is built upon its deep specialist knowledge, client advocacy, tailored advice and service excellence.
JLT is quoted on the London Stock Exchange and owns offices in 41 countries with more than 10,600 employees. Supported by the JLT International Network, it offers risk management and employee benefit solutions in 135 countries.
For further information about JLT, please visit our website www.jlt.com.
About JLT Employee Benefits
JLT Employee Benefits is one of the UK’s leading employee benefit providers offering a wide range of benefit and pension services, including administration, actuarial and pension consultancy, investment, Self Invested Personal Pensions (SIPPs) and Small Self Administered Schemes (SSASs) administration, flexible benefits, healthcare, benefit communication and financial education.
JLT Employee Benefits employs over 2,200 professionals throughout the UK and in 2015 had revenues of £167.4m in UK & Ireland.
Pensions and employee benefits companies within the JLT Employee Benefits group of companies include: JLT Benefit Solutions Ltd, Profund Solutions Limited, JLT Wealth Management Limited, JLT Investment Management Limited and Independent Trustee Services Limited. JLT Employee Benefits is part of Jardine Lloyd Thompson Group plc.