No rushed decisions: employers urged to support employees’ financial wellbeing around pensions

With the coronavirus pandemic leading to an increase in uncertainty for many, it’s a crucial time for employers to support the financial wellbeing of staff. When it comes to concerns about pensions, employers should encourage staff not to panic and make rushed decisions, and take the time to understand what the pandemic means for their pension savings.

Defined contribution savers

For employees with defined contribution pensions, the impact of the virus on financial markets means people may worry that the value of their pension pot has gone down. However, investments are designed to deliver in the long-term and historically financial markets have recovered over time. If employees are concerned about where their money is invested, they should speak to their providers or check their scheme information.

Employees who are approaching retirement will no doubt be concerned about how the pandemic will impact their savings. Those who were looking to retire soon may find their savings have been reduced, meaning either having to accept a lower retirement income, or if possible, postponing retirement giving markets time to recover. Employees facing particular hardship may even consider accessing their pension earlier than intended.

Defined benefit savers

For workers with defined benefit pensions who may have concerns or be considering transferring their pension, employers should suggest they speak to a regulated adviser or seek impartial guidance. Recently The Pensions Regulator and the Financial Conduct Authority have been urging people to think through their options in order to avoid making any decisions that are not in their long-term interests.

The importance of guidance and advice

Unfortunately, the ongoing market uncertainty means scammers will try to encourage people to cash out of their pensions. Employers should advise staff to be alert for the warning signs of scams and direct them to the ScamSmart website to find out more.

A small amount of time on the phone with a pension specialist could make all the difference in helping people avoid decisions which could unwittingly hurt or put at risk the savings they have built up over their working lives. Free impartial guidance is available via The Pensions Advisory Service helpline, and those aged over 50 with a defined contribution pension can book a Pension Wise appointment which explains the pension options available.

Carolyn Jones is head of pension policy and strategy at the Money and Pensions Service.

This article is provided by the Money and Pensions Service (MaPS).