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Employee Benefits Advice for Corporate Clients

How Ros Altmann can help advisers

As featured in IFA Magazine by Elliott Silk, Head of Employee Benefits at Sanlam UK

“A majority Conservative government should bring much needed security for the adviser industry as the continuation of auto-enrolment and retirement freedoms will produce a wider spectrum of savers seeking paid-for, professional financial advice. To make the most of this opportunity, advisers need the support from Ros Altmann as the newly-elected Pensions Minster. If she is consistent and stays in her seat for the whole term, we should see the real benefits of the pension legislation.

“One of the goals of the new Minister should be to rethink the way the industry talks about pensions to clients. Pensions often carry fear and bad news for consumers – people just switch off. Ros Altmann needs to change consumers’ opinions of retirement as pensions often signify a life that is a long way off. At Sanlam we recently hosted a dinner with clients, with the aim to get people talking about retirement planning in a more relaxed manner, similar to how they would discuss their finances with friends and family. It was clear that amongst many people still in work, particularly for those in the private sector, the word pension is off-putting as it is intrinsically linked to getting old.

“As an alternative, we need to speak to younger people about ‘30 year savings plans’ instead of pensions. A 25 year old entering auto-enrolment may consider signing up to a 30 year savings plan, which they can access from 55, more so than signing up to a pension. As a consequence they may be more willing to invest more of their salary into savings. Such a step change in thinking will need the clout of Ros Altmann to add crucial support for the long road ahead to change savings behaviour.

“Furthermore, it is our role as financial advisers to spend more time educating the general public on what the retirement freedoms mean. The reforms are a brilliant way of giving more people flexibility in retirement. However our recent research amongst 2,000 over 55s found that the vast majority – 85% – are unaware they face a tax bill when accessing cash from their pension. Despite this lack of knowledge, our study found the appetite to take advantage of the reforms, and take out a lump sum is high. One in three people (33%) said they planned to take advantage of the new rules and take out considerable sums, not knowing about the tax they will pay. This shows that many savers are planning to exercise the new rules, unaware that the pension funds they have built up over many years of hard work will be raided by tax charges.

“This lack of awareness emphasises the need for consumers to seek the professional advice of financial planners who can support people in setting their objectives for retirement and planning on how they can get there. I believe that the question of greater financial education needs to be put to our new Pensions Minister. We have a whole industry of talented advisers and we need her support in communicating to savers that we can show them a way to better financial freedom.

Read publication here. (Please note this link will take you to an external website).

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