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Would you take financial advice from your employer?

Getting more people to save for retirement needs to tie in with helping them to make the most of their money when they retire.


by Michelle McGagh on Dec 17, 2012 at 12:12

Would you take financial advice from your employer?

Unless you’ve got a dream job, most people don’t spring out of bed on a Monday morning eager to get to the office. Despite this though, you probably trust your employer more than you trust financial services companies.

The majority of people save for their retirement through their employer by contributing to workplace pension schemes, so it’s a good job that we trust them. But there is concern that we’re still not saving enough and that our employers, as our trusted source of information, aren’t doing enough to help us save more.

Wealth at Work, a company providing financial education and advice in the workplace, recently conducted a survey of employers and employees that showed just 16% of employers believed their staff are saving enough for retirement.

And when it comes to employee retirement knowledge the stats are just as worrying; only 18% of employees know about the various ways to turn their pension into income and only 13% are aware that they no longer have to purchase an annuity.

Jonathan Watts-Lay, director of Wealth at Work, said a lack of knowledge and education means that people ‘may be missing out on a higher income potentially losing thousands of pounds over the course of their retirement’.

The best way to make the most out of your pension is of course to get professional advice. Many employers offer advice through the workplace and the government allows employers to provide £150 worth of financial advice to employees tax free.

This tax break is great for employers and employees but in truth it’s just not enough to cover the cost of full advice; £150 might buy you an hour with an adviser to have a general talk about your retirement options but it is unlikely to be enough to develop a full financial plan.

If you want an adviser to find you an annuity it will usually cost £600 to £750, four or five times as much as employers are allowed to offer.

Advice is essential to get the most out of your retirement money, and buying an annuity is usually the biggest ‘purchase’ you’ll make in your life after your home, so more than £150 needs to be invested into it.

The government wants everyone to save more for their old age, but it needs to help people reaching retirement to get the best deal and the only way to do that is to offer more tax breaks on advice in the one place we’re most likely to get it from.

4 comments so far. Why not have your say?


Dec 17, 2012 at 19:47

Unfortunately my blue chip US company only gives pension advice to its employees when they are to retire which is far to late to react if found wanting. Would be really good benefit if access to such advice was available much earlier in ones career to assist in smoothing things out in a timely fashion.

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Rose G

Dec 18, 2012 at 10:10

My organisation is not known for its financial nous, so in a word, NO!

We do have an independent company who deals with our pensions, but I am not sure that they are any better?

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Dec 21, 2012 at 21:42

My employers use a firm to administer the group pension scheme but every letter I get contains a disclaimer stating that it "isn't" financial advice, so not much help. Also I'm surprised it would cost £600 to £750 for a financial advisor to find an annuity. Isn't it just a case of searching comparison sites for the best rates? Or am I missing something fundamental?

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John Willman

Dec 22, 2012 at 22:29

Listen to anyone offering you advice including your employer but be selective on what advice you take and act upon!

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