Many employees for some of the largest companies in Britain are missing out on increasing the amount in their pension pots. Data released shows that 25% of FTSE 350 employers are offering contributions to their workerís pensions of around 10% to 11%.
The global professional services firm Towers Watson stated that employees are ìleaving a lot of money on the tableî because in order to get the contributions from their employer they have to up their own.
A common reason as to why people are resistant to increasing their own contributions is that they do not want to end up paying into an annuity whereby they receive the money as a retirement income per annum.
However, new rules for pension saving are to be introduced this year on April 6. This will mean that those employees paying into a pension will no longer have to take it in the form of an annuity and can in fact remove the savings as cash when they move into retirement.
Experts have argued that the change in legislation will lead to workers paying more into their pension pots thus benefitting more from the incentives offered by the companies they work for. This will ensure more people have the chance to accumulate enough in savings to have a respectable standard of living in retirement.
The news comes at a time when those in charge of overseeing the change in legislation, including the government, the providers and the regulators, are receiving criticism for being unprepared for the alteration.
In an Association of British Insurers (ABI) conference on Wednesday 25th, Huw Evans alerted the public to the fact that many problems still exist with how the new pension policy will function including exactly how the information offered to pensioners through the Pension Wise service will be delivered.
In a statement Mr. Evans comments: ìIt is impossible to stand here six weeks before 6 April and say the government is ready- that is a statement of fact, not an attribution of blame. Critical pieces of the jigsaw are still missing and will not be in place in time.î
He goes on to state: ìWe also need to be careful to remind the public that 6 April is not a deadline, it is simply the start of new freedoms. People should not be rushed into making quick decisions about pension savings they may have accumulated over 30 years.î
The treasury have responded with the statement: ìWe welcome the ABIís commitment to these new freedoms and will continue to work with industry to ensure we are all ready.
ìWeÖare on course to meet demand for face to face and telephone guidance in April. In addition, we are working closely with the Department for Work and Pensions to deploy their resources to help manage any initial spike in demand for the service. We agree that people should take their time and not rush decisions.î