Employee Benefits poll: Just one-third (33%) of organisations think the pension pot for life plans announced in November’s Autumn Statement by Chancellor Jeremy Hunt will help employees to manage their pension, according to a survey of Employee Benefits readers.
Two-fifths (40%) said they do not think the pension pot for life plans will help employees to manage their pension, whereas 28% were unsure.
Under the reforms, employees will have a legal right to require a new employer to pay pension contributions into their existing pot, which will avoid the accumulation of multiple pension pots throughout their working life. Employees would also choose their own pension scheme for automatic-enrolment.
Hannah English, head of DC corporate consulting at Hymans Robertson, said: “Introducing such changes would put an overwhelming amount of responsibility on members to ensure they make the best decision possible in the most informed way. Current lack of understanding of savings vehicles among the average saver could result in savers making poor decisions about where their pot is invested, perhaps making decisions based on the cheapest solutions or those that are the most marketed, rather than those that offer the best value for money.
“Education to savers would need to be carefully managed as part of this initiative. Allowing savers to choose their provider would put an additional burden on employers which would then need to be able to capture the chosen provider of their employees and ensure that contributions are correctly directed in the chosen way.”