With just over four months to go until A-Day, 45% of trustees and employers still have not started adapting their pension scheme administration ready for the changes, claims new research by Mercer.
A survey carried out by the human resource consulting company shows more than 4 in 10 employers and trustees have not started to adapt their administration processes to comply with the Pensions Act and Finance Act requirements that come into force in April.
By A-Day trustees and employers have to make a number of changes to their pension schemes, such as ensuring transfer values are available for those members who have between three months and two years’ pensionable service, and they can also offer new features, including flexible retirement and the ability to pace pension contributions.
Although 55% of the 160 respondents have started making changes, just 6% of those say they are well progressed. Of the 45% who have done nothing so far, the majority claim they are still deciding what changes to make, with 4% saying they hadn’t even considered the issue, while 8% are relying on a third-party administrator to make the necessary changes.
Surprisingly just 3% of respondents felt cost is the biggest barrier to preparing for A-Day, with 10 times as many believing the hardest challenge is actually reaching decisions. Communicating the changes to members is felt by 29% to be the greatest barrier to implementing the changes.
Flexible retirement also threw up some surprising results with 50% of those surveyed claiming they had no plans to change their policy in this area, with 17% of these believing flexibility is to complex to administer, while the rest are waiting to see what changes other companies make. Of the remaining half, 47% say they have decided to allow benefits to taken while in employment.
Barry Mack, principal at Mercer, says phased retirement may be difficult to administer unless a system has the flexibility to incorporate the necessary changes. He point out that there are also many other HR issues to consider before introducing a flexible retirement policy, such as ensuring employees who work part-time while receiving benefits remain motivated and committed to their jobs.
He adds: “A-Day is fast approaching, so urgent action is needed by those still deciding what changes to make. Employers should be working with their administrators and system providers now to ensure the deadline will be met.”
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Nyree Stewart on 020 7968 4558 or email [email protected]IFAonline
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