- Only 23% of 40-65 year old pension savers said their employer currently offers financial planning advice as part of their benefits package
- Two thirds (65%) of those who don’t receive advice as a benefit said that they would like to receive advice from their employer
- However, only a quarter (26%) would currently trust financial advice provided by their employer – less trusted than friends and family
Not enough employers are offering their staff advice on pension savings as an employee benefit. This is one of the key findings from a poll of 2,000 40-65 year olds commissioned by JLT Employee Benefits (JLT).
Only 23% of middle aged employees say that their employer currently offers retirement planning advice as part of their benefits package. The majority either know for certain that they do not have financial advice as part of their retirement package (51%) or simply don’t know (26%). However, of those who are not currently offered financial advice as a benefit, two thirds (65%) say that they would like to be.
However, despite the desire for more support around pension savings advice, it appears that employers have some work to do if they are to be seen as a credible source of advice around pensions. Currently, according to JLT’s research, employers are one of the least trusted sources of pension savings advice, with only a quarter (26%) of 40-65 year olds likely to trust financial advice given by their employer. Only the media is a less trusted source for such advice.
The most trusted recommendations around pensions savings that people would take is that of an independent financial adviser (IFA) (55%), followed by the government’s Pensions Wise (51%) guidance offering and their bank/pension provider (33%). Perhaps the most surprising finding is that ‘family and friends’ are cited as more trustworthy than employers in providing guidance and recommendations around pension savings.
Commenting on these findings, Richard Williams, Director, Pension Decision Service, JLT Employee Benefits, said: “Our research reveals an interesting paradox. It is clear that too few employers are offering sufficient support to their employees around pension savings, and that advice as a benefit is not as commonplace as it perhaps should be. However, although the desire to have more support is there, the scepticism around employers offering such a service will need to be overcome. The quickest route to solving this perception gap for most employers will likely lie in partnering with reputable experts who can be the credible face of pensions advice and a portal to greater employee engagement with their occupational savings.”
Employees lack of engagement in their savings is amply evidenced by their lack of knowledge around some key pension-related products and topics. By way of example, there is little understanding of financial products available to savers upon retirement. Nearly half of respondents (46%) don’t know what an annuity is, while fewer still do not have any concept of flexible access drawdown, an enhanced annuity, or uncrystallised funds pension lump sum, with 68%, 81% and 90% of respondents respectively not knowing what these at-retirement options are.
In terms of affording financial advice, the majority of people are in the dark about a new way that they can pay for it. More than three quarters of respondents (79%) did not know that under a Government initiative you can access your pension savings to pay for financial advice.
In spite of this lack of knowledge, or perhaps because of it, there is a belief amongst middle aged Britons that younger generations are poorly equipped to make informed financial decision, with 85% thinking that employers should supply younger people with wider financial education, including saving for a pension.
Richard Williams added: “A lack of engagement fosters a lack of awareness, and this research shows how far the pensions industry still needs to go to properly engage with savers and get them thinking about their retirement. Post RDR, a lot of people see financial advice as expensive and out of their reach. In addition to getting more employer support it is vital that the message around the importance of getting advice is made alongside ways people can fund it.
“It is interesting that, despite being relatively poorly informed about pensions, middle aged employees think that younger generations know even less. Upskilling the financial literacy of the workforce is a huge challenge for employers, government and society more broadly. However, given that the prize is for better financial planning and better retirement outcomes for UK workers, it is a challenge worth rising to.”
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JLT Employee Benefits
PR Manager, JLT Group
+44 (0)20 7895 7705
+44 (0)7799 340658
+44 (0)20 3047 2529
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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.