The pension freedoms have increased people's choices in how they access and use their DC pension savings.
However, where there is choice there is a need for greater understanding and guidance around how to make good decisions.
Financial education is an effective way to increase awareness and understanding, and can guide large numbers of staff on the changes, their options and how to evaluate which is best for them.
And it's not just those at retirement who need this guidance; pension savers throughout their career will be more engaged with this valuable benefit if they understand that they have the freedom to choose how they access it.
It is also key that those in default funds which move pension investments into lower volatility assets in the years ahead of retirement, understand what this means and make an informed decision whether this is the right investment strategy for their pension.
Paul Craven, reward and benefits manager at Eversheds, says that the pension freedoms have created a “need for understanding and clarity for [employees] who do not feel able to make those decisions alone”. The way in which employers communicate the pension changes is integral to staff comprehension of these, says Dupe Olowokere, global benefits manager at Travelex Global Support Centre. “The best thing employers can do is inform and educate; general financial education will equip employees with an understanding of the impact of the changes,” he explains. The pension freedoms have also created opportunities for organisations to offer their workforces bespoke communication and financial education around the options available to them. Gary Brewer, head of reward, organisational development and HR at William Grant and Sons, says: “There is a clear responsibility upon employers to support, if not guide employees .”