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| The
first choice for people
in pensions |
| Employers could do better with defined contribution decisions |
| Few
employers offer education, advice or assistance to their employees
when it comes to retirement options and could do more to ensure the
full benefits of defined contribution (DC) pensions are achieved,
according to Watson Wyatt. The financial consultant says that employers should provide some high-level awareness and education, moving towards help with more detailed planning as an employee approaches retirement age. A mixture of face-to-face, online and paper communications should be used, it said. “Unfortunately, many employees will not even be aware that they have important choices to make,” commented Jackie Holmes, a senior consultant at Watson Wyatt. “Timely advice or guidance at this stage can provide a considerable boost to the value of the employee’s pension – and do much to enhance an employer’s brand.” Since DC pensions now offer options such as enhanced annuities, variable annuities, conventional annuities and income drawdown, Watson Wyatt believes there is even more reason for these options to be properly considered in the context of the employee’s financial needs. “Many people do not realise that they may be eligible for enhanced or impaired annuities. They are available not just to those with serious medical conditions, but to those, for example, who are overweight or smoke – and can increase retirement income considerably,” said Holmes. Watson Wyatt believes that the costs can be kept manageable for employers by using financial education seminars, which the consultant suggests could be followed up by individual counselling. - Pensions Age September 2008 |