Punter Southall Aspire’s Chief Executive Steve Butler has welcomed the move by one in ten defined contribution schemes to pay for financial advice for their members as they approach retirement.
Steve has called for more schemes to follow suit, adding that this kind of financial guidance should be extended to all members approaching retirement to avoid risks including paying too much tax, withdrawing too much money and depleting pension savings or falling foul of a pension scam.
“While it is positive that a small percentage of DC schemes are starting to provide support and access to professional financial guidance and advice for their members as they get closer to retirement and are considering drawdown and annuities, all employees approaching retirement would benefit from this kind of support.
“Looking after an employee’s financial wellbeing throughout their career, as well as when they are approaching retirement, can help people better prepare for their future, engage more with their pension and understand their options to ensure they aren’t sleep walking into retirement.”
Steve’s comments come after a survey by Aon[i] found ten per cent of DC schemes were paying in full or subsidising financial advice for their members to help them make better informed decisions.
The research follows a new survey from Standard Life Aberdeen[ii] highlighting that two thirds of those due to retire this year risk exhausting their pension funds and may run out of money in retirement.
A survey from Punter Southall Aspire[iii] last year found six out of ten employers did not offer any guidance for staff when they reached 55 – the age where they can legally unlock some of their savings.
While eight out of ten employers said their company and people would benefit from being better informed about all things financial, 37% said paying for external financial advice would be too costly, they had concerns about regulation or did not see it as their role as an employer.[iv]
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