An increasing number of organisations are employing annuity brokerage services to help staff make appropriate retirement income decisions. However, delays in data transfer are causing problems. Helen Morrissey looks at why these are occurring and what can be done about them.
Employers’ responsibility regarding their staff’s pensions and retirement is constantly evolving. This autumn we will see the largest employers starting to auto-enrol staff into a qualifying pension scheme. However, there is an increasing need for employers to extend the support they offer to staff into the at- and post-retirement phase.
The abolition of the default retirement age means employers can no longer rely on employees retiring at 65. If this is not managed well, employers could find themselves with employees who are working longer because they have to – and not doing so because they want to.
In addition, the increased complexity of the retirement income market means retirees need more assistance than ever in making the right retirement income decisions. As many either can’t afford or don’t know how to go about getting appropriate advice, we are seeing more employers getting involved in helping employees navigate this area.
“When trustees come to see us, they have significant issues in that the default retirement age has now been taken away – they have an extra incentive to ensure that their clients retire well,” says Annuity Direct CEO Bob Bullivant. “This helps with HR planning and also ensures people get the best value for money from their pension.”
In March, Fidelity signed an agreement with retirement specialist Annuity Direct to give members in its DC pension schemes access to a whole range of market retirement guidance and advice services. In addition to this, services such as The Open Market Annuity Service have been working with employers to help employees exercise their Open Market Option.
While the development of such services can only be seen as a good thing, there are issues that need to be navigated. Many advisers have reported difficulties in extracting the necessary data from pension providers on retiring employees. Data protection issues are highlighted, which can result in huge delays for advisers wishing to help employees make the right choices.
“There are issues when the adviser has advised the employer but not the employee,” says TOMAS sales and marketing director Graeme Riddoch.
“In this situation, the adviser does not have a relationship with the employee directly and so it can be difficult when it comes to getting their details from the pension provider.
More helpful providers will let you have a list of who is retiring that year but others say their systems don’t work that way – are they just dragging their heels to hold on to people’s money for a while longer? Some providers have brought up data protection issues and in this case we have to contact each employee to get individuals’ authorities. This is not ideal.”
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