UK Trustees and employers’ faith in people acting responsibly in retirement has fallen, a straw poll conducted by Broadstone Corporate Benefits has found. In its latest survey of leading Trustees, it found that only 18% of respondents had faith in retirees’ ability to make responsible retirement decisions once April’s pensions freedoms come into force.
This shows a further decrease from a poll conducted in December 2014, a figure which had dropped enormously from the 90% who held the same beliefs in May last year.
Broadstone also revealed there is an expectation of a significant increase in the number of transfers from Defined Benefit (DB) to Defined Contribution (DC) pension schemes once the Government’s new pensions freedoms kick in. Three quarters (73%) of the Trustees and employers surveyed believe the greater flexibility and choice soon to be afforded to DC schemes will make transfers out of DB arrangements a more attractive option.
With this in mind, and with the freedoms now imminent, support for the Government’s decision appears to have weakened slightly. Currently, only 86% of those surveyed support the flexibilities, compared with 88% in December last year and 100% the previous May. However, the majority of trustees and employers are still behind the Government in its moves to provide retirees with more flexibility and choice.
Broadstone also found that 68% of Trustees and employers expect annuities to remain a key part of retirement planning, compared with 58% last December and 73% in May, which indicates a resurgence in faith in annuities. December’s survey followed not long after the Chancellor’s 2014 Autumn Statement, after which their value was doubted.
Broadstone technical director, David Brooks, said: “Although most of the pensions industry does still support the upcoming flexibilities, this support is slightly fading; there are clearly still strong concerns around what actions members will take once they are accorded the freedom and choice to make their own pensions decisions.
“Considering so many trustees think there will be a significant increase in the number of retirees who may transfer to a DC scheme, the issue of financial education and benefits of professional advice become more apparent than ever. It is vital that those converting from DB to DC do not make hasty, ill-thought out decisions for their future, and that they fully understand all the options available to them.”