Plan Sponsors Need to Be Given Can Do Attitude
06 August 2012 (PLANSPONSOREurope.com) - Plan sponsors need to be encouraged to have a can-do rather than can’t do attitude, Malcolm McLean, consultant at Barnett Waddingham, has told PLANSPONSOR Europe.
McLean’s comments come as a study by insurer MetLife finds an £11,000 average earnings gap between men and women at 50 years of age. Men earn an average of £30,000, compared to £19,000 for women.
McLean told PLANSPONSOR Europe that while the government has taken action to address this disparity, more needs to be done to help plan sponsors encourage UK workers, whether male or female, to save for retirement.
“The group of people that will gain most from the government’s new state pension plan will be women. Women retiring from 2015 onwards will have a much better state pension than they had previously. Whereas they do substantially worse than men when it comes to private pensions and work part time and haven’t been able to join a private pension arrangement, they will probably gain from the state pension – it’s not all bad news for women – there is some good news.
“The base comes from the state pension from which they can build their private pension plan. At the moment women don’t know whether they are coming or going because there is a real possibility that they will end up in a situation where they are not really gaining from joining a private pension scheme because it’s all swallowed up by means-tested benefits because their income is not above that. If you can get a state pension which gives them a basic level of income which keeps them off means-tested benefits anything else they save beyond that is a bonus and that ought to encourage them to save and encourage their female employees to join their pension schemes.
“There is this vagueness of how far employers can go to give financial advice but that doesn’t mean they can’t point to their workers the advantages of joining a pension scheme. They are turning away wages because the employer contributes. I don’t consider that to be financial advice – it seems to me a statement of fact. It is something that some people need to be told about but when you look at some of the stuff the FSA puts out to employers on what they can and cannot do, the emphasis is very much on what they can’t do – don’t say this, don’t do that. So employers say I won’t touch this. People need to be encouraged to get involved with auto-enrolment and not to opt out but there is a risk.”