Bringing you live news and features since 2006 

Poor understanding leaves pension scheme members at risk, says Xafinity

RELATED TOPICS​

Many pension scheme members are in the dark about their pension and run the risk of making poor decisions as a result, according to research by Xafinity.

When asked whether they understand what pension they will get from their scheme, just 25 per cent said “yes”.  
 
Of the remainder, 34 per cent said “no”, whilst 41 per cent said that they had some understanding.
 
The research also showed that nearly one half (45 per cent) of members are planning to use online research to plan their retirement, which is greater than the number of people planning to consult an IFA (37 per cent).
 
Xafinity warns that the fact that nearly a half of members are planning to utilise online research to plan their retirement means that schemes need to be proactive and vigilant in helping members to avoid falling victim to pension scams. Xafinity supports the government’s consultation on banning cold calls as a welcome step forward, but stresses that cold calls are not the only way for members to be targeted by the unscrupulous.
 
The research also highlighted a significant lack of understanding amongst individuals regarding the various options open to them at retirement: 37 per cent were not aware that they could start receiving their workplace pension before normal retirement age, 41 per cent were unaware that they could start receiving their workplace pension after normal retirement age, 30 per cent were unaware that they could exchange some of their pension for a tax free cash lump sum and 42 per cent were unaware that they could transfer the value of their pension to a different arrangement.
 
Despite this lack of understanding, the research showed that pension members were open to the various options available, and keen to receive more information to help them plan for their retirement.
 
When asked whether they might consider the various options open to them at retirement most respondents were open-minded: 71 per cent said they might consider receiving their pension before normal retirement age, but only 46 per cent might consider taking it after normal retirement age – 54 per cent would not. A further 87 per cent might consider exchanging some pension for a tax-free cash lump sum, and, 65 per cent might consider transferring the value of their pension into a different arrangement.
 
Paul Darlow, from Xafinity, says: “Pensions are more complicated than ever with an increasing number of options and factors for members to consider in the run-up to retirement. If members don’t understand what pensions they will get or what their options are, they may be in for a shock and look for someone to blame. Recognising this, many pension schemes are considering how they should best support members. The results of this research are food for thought, and will hopefully be helpful to pension schemes as they consider this question, especially given that the research showed that 47 per cent of respondents were keen to receive more information from their pension scheme soon to help them understand their options. The results strongly suggest that just sending out a wake-up pack prior to normal retirement age is insufficient. Instead, I believe that more effort needs to be made to engage with members in the run-up to retirement through a series of timely, engaging communications.”

Latest News

Figment Europe, a provider of institutional staking infrastructure, writes that it is solidifying its presence in the heart of Europe’s..
Saving and investing app, Moneybox, has doubled the number of ETFs available on the platform, in the light of ‘growing..
Global X ETFs has announced the appointment of Ryan O'Connor as its Chief Executive Officer effective as of April 8, 2024. ..
Value-driven structured credit investing firm, Angel Oak Capital Advisors, LLC, has announced the completed conversions of two of its mutual..

Related Articles

Sal Esposito, Zacks Investment Management
Zacks Investment Management started doing investment research in 1978 and in 1992 started its investment management arm, initially with SMAs...
Jeremy Senderowicz, Vedder Price
Jeremy Senderowicz, a member of the Investment Services Group at law firm Vedder Price, has witnessed a steady upswing in...
Graham MacKenzie, Toronto Stock Exchange
The evolution of ETFs has been a multi-decade experience for Toronto Stock Exchange says Graham MacKenzie, managing director, Exchange Traded...
Frank Koudelka, State Street Global Services
ETF data provider and ETF Express data partner, Trackinsight, has published its Global ETF Survey 2024 Report: ‘50+ Charts on...
Subscribe to the ETF Express newsletter

Subscribe for access to our weekly newsletter, newsletter archive, updates on the site and exclusive email content.

Marketing by