Three-quarters of employers intend to use their existing scheme to comply with employer duties, but 69 per cent have not yet begun to prepare for the pension changes, according to new research.
But despite this, only 30 per cent of employers who responded to Punter Southall’s third annual DC pensions survey said they expect their current pension arrangements to be compliant.
All respondents were aware of the pension changes due to take place and over half thought the impact would be positive.
But one-third had not considered the impact of the removal of the default retirement age and 77 per cent did not offer alternative workplace savings vehicles.
The survey found 48 per cent of companies do not offer salary sacrifice and over 50 per cent are concerned about its long-term legality. It also found that investments, contributions and communications were viewed as the three most important elements of any pension scheme But despite respondents continuing to view investment as one of the three most important elements in a pension scheme, the survey shows generic default options continue to be used by the majority of members.
Two-thirds of companies offering a default fund for pension scheme members are using a managed fund, but only 61 per cent believe their default fund meets the needs of employees. While some defaults are actively selected by the company, many are simply those offered by the scheme provider, and are chosen without any consideration beyond underlying elements such as asset class or risk factor, says Punter Southall.
Alan Morahan, principal at Punter Southall DC Consulting says: “Even once a default option is selected, it cannot be assumed that it will continue to be suitable. Despite this, our survey revealed that 50 per cent of companies have not changed their fund range or default investment option within the last two years.”
