Investment Advice for Group Personal Pensions (January 2010) |
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Communication and Advice is Key for Retirement Planning
Whatever the final impact post 2012, one thing is certain and that is the fundamentals will not change. The majority of UK workplace schemes are now Defined Contribution arrangements, consequently the underlying investment strategy and ultimately the size of an individual pension fund remain the key drivers.
This is irrespective of whether the member is planning to take income via an annuity or, as is becoming ever more popular, the fund is to be gradually drawdown during retirement.
The majority of Group Personal Pension Plans now offer access to over 100 different investment funds including specialist external fund managers and selecting the correct investment fund or funds without professional independent financial advice is a potential minefield.
It is becoming more and more important to ensure that members of pension schemes understand the choices they need to make and this can only be done by providing clear and easy to understand information on all aspects of the pension scheme.
In Cartlidge Morland’s experience many members of DC Pension schemes, in particular Group Personal Pension Plans (GPP), pay insufficient attention to the underlying investment funds selected, or if they did at outset, have failed to review or re-adjust their selection in the light of global economic conditions.
It is important that the individuals understanding and risk-tolerance is reflected in the funds chosen. Quite often members have simply opted for a default or managed fund, which may now be inappropriate for their current attitude to risk or ‘life stage’. For example it may be fine to be in a higher risk fund in your early 30’s, but is probably not the best way forward if you have only 5 years to retirement.
The vast majority of GPP holders have a significant exposure to equities and have consequently seen their fund value fluctuate significantly over the past couple of years. Ensuring that their underlying investment choices remain consistent with both their attitude to risk, and their expectations of growth and tolerance to falls in value, is vital.
At Cartlidge Morland we provide all pension scheme members with clear and easy to understand information on their pension scheme and give tailored independent advice both on their retirement planning and also the selection and management of an investment strategy that fits their attitude to investment risk. This happens not only when an employee joins their pension scheme but also on an ongoing regular basis.
Cartlidge Morland Group Pension Investment Service
To help your employees have a clear understanding of the underlying investment funds selected and to ensure that an individual’s pension planning best suits their current and forecasted needs Cartlidge Morland have developed a simple six-stage programme.
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1 |
Review the existing plan and establish the fund choices available. |
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Design a communication programme, combining both face-to-face and e-mail communication with members that provides sufficient information to understand: a) their attitude to risk |
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Provide details of other projected pensions and outline their retirement options |
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Establish any pension shortfall against the target income. |
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Advice and implementation to ensure that the member accumulates a pension as close to their target income as is practical and affordable. |
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Provide an ongoing 6 monthly review service. |
We have recently launched a new pension scheme for a client that encompasses the provision of clear, easy to understand information coupled with our Investment Service and Rebecca Allin - Human Resources at Corona Energy, said, ”We are very pleased to offer our employees a pension scheme which best serves their interests. Our staff has been thinking more carefully and clearly about their pension arrangements for the future, which is a positive outcome from the whole exercise.”
Contact Cartlidge Morland to us to find out how we can help.
Demitrius Nurse
Partner - Employee Benefits
Email: employeebenefits@cartlidgemorland.co.uk
Call: 020 7709 5560
Phone us on 020 7709 5560 or complete the online contact form
