At a high level breakfast seminar involving trustees and sponsoring employers, BROADSTONE Corporate Benefits asked attendees views for their views on the recent changes to pensions announced in the Budget.
Our poll found that:
• 100% support the government’s decision to expand pension flexibility
• 68% expect defined benefit members to be tempted to take their transfer value and convert to defined contribution to access flexibilities.
• 90% of employers/trustees think that individuals will act prudently in retirement
• 73% expect annuities to remain a key part of retirement planning
• 14% support a government ban on transfer from defined benefit to defined contribution.
Commenting on this, David Brooks, BROADSTONE’s Technical Director, explained,
“The wide-ranging changes mean that trustees and sponsoring employers need to move from ‘wait and see’ to taking action. Top of their list should be the need to review their default investment strategies to ensure that they remain relevant for the majority of their members. This is especially so when typically 96% of the members make use of the default strategies.
“We found that trustees were happy to facilitate extra flexibilities, but did not want to end up running
“drawdown” facilities during the retirement/ decumulation phase of savings.
“Sponsoring employers should also review the benefit structures in their defined benefit schemes to ensure they remain fit for purpose in the changing world. Members use of trivial commutation and additional voluntary contributions are going to change with the Budget’s changes to the way members will structure their retirement income. By reviewing the schemes’, benefits employers could realise long-term cost savings as members have access to the fullest range of options possible. In many cases rules will need to be changed and this work should begin sooner rather than later.”