Over recent weeks, pension news has been hitting the headlines as the government rolls out its auto-enrolment, which is aimed at encouraging more employers to offer their staff a workplace pension, at the same time as encouraging employees to save for retirement.
Now, the government have proposed a further pension reform, after it was revealed that on average an employee will switch jobs eleven times during their working lives, and build up a collection of small pension pots along the way.
Although many of these pension pots will lie dormant once the employee has switched jobs, as neither the employee nor employer will contribute towards them; the pots are still invested and as such can accrue investment returns.
Now the government have outlined proposals which are designed to make it easier for employees to transfer pensions from one employer to another when they change jobs.
However, the proposals have been criticised for being “impractical”, whilst some have suggested that the proposals will risk cutting the retirement income received, as pension pots run the risk of being transferred into poorly managed schemes, which have high charges and low investment returns.
It is also feared that the moving of pots from employer to employer could result in significant administration burdens and transaction cost, which would ultimately be paid for by consumers.
With confusion surrounding pensions, and reforms being suggested on an almost regular basis recently, finding the right pension scheme to ensure that you have a comfortable retirement may seem like a daunting task.
Thankfully, myself and the team at Milsted Langdon are on hand to offer honest, tailored financial planning advice, which is designed to help you get the most out of your finances both now and in the future; so if you’re confused about pensions or worried about your finances come retirement, come and speak to us.
Milsted Langdon Director, Peter Groves, specialises in strategic business and tax planning, services for high net worth individuals and professionals.