Employee Benefits poll: Approximately half (49%) of organisations think the pots-for-life plan will increase employees’ engagement with their pensions, according to a survey of Employee Benefits readers.
More than one-third (39%) of respondents said that they do not think that the pots-for-life plan will increase workers’ engagement with their pensions, while 12% were unsure what the impact would be either way.
Last November, Chancellor of the Exchequer Jeremy Hunt announced plans to offer a pensions pot for life arrangement during the Autumn Statement 2023. Under the reforms, employees would have a legal right to require a new employer to pay pension contributions into their existing pot, avoiding the accumulation of multiple pension pots throughout their working life. Employees would also be able to 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 amongst 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.”