Filling the pensions gap

A web-based tool to ‘predict’ retirement income. By Howard Popeck

Helping employees to understand and appreciate the value of their benefits
has always been a challenge. Understanding how their money purchase pensions
fit into their overall financial plans presents an even bigger challenge.
Towers Perrin, the global benefits consultancy, claims its FuturePlan toolkit
is the intelligent answer.

Simple rationale

Many employees demonstrate an attitude of ‘reckless optimism’ when it comes
to making plans for their future well-being. However, research shows that
people are happy to accept responsibility for their financial planning if they
are given the information, tools and backing needed to do the job. FuturePlan
sets out to offer both the informed guidance and the support crucial if
employee decision-making is to be based on reality.

Paid for by the employer, FuturePlan gives employees free access to
financial education as well as totally independent and reliable advice.

UK test-bed precedes global roll-out

The service was launched in the UK because its pension industry was and
remains in complete turmoil. The continuing trend by employers away from
defined benefit (DB) towards defined contribution (DC) pensions will result in
thousands of workers facing massive savings deficits and lead to many retiring
into poverty.

The UK Government shows no signs of finding an achievable or workable
solution, and employees are either unwilling to pay for advice or don’t trust
their advisers and are likely to fall far short of their expected retirement

Now, more than ever before, the onus is firmly on the employer to ensure
employees’ are provided for in retirement. Towers Perrin believes this is the
beginning of an increasingly global drift in benefits and, consequently, the
complexity of its benefits legislation made the UK an uncompromising test-bed
for the proposed solution.

The enthusiastic response in the UK means that discussions are now under way
regarding roll-outs to the US and in other countries where the paucity of
benefits education may be equally acute and where research findings, similar to
those shown below, are revealed.

New research

Carried out in association with MORI, Towers Perrin found that 81 per cent
of respondents would have confidence in an employee-appointed adviser.
Additionally, 78 per cent would welcome financial education and advice provided
by their company. The internet can be accessed by 81 per cent, either at home
or at work and 85 per cent would feel comfortable using Internet-based
financial planning tools.

Of those questioned, 11 per cent were able to correctly identify an
independent financial adviser (IFA). Many mistakenly believed IFA’s received no
commission on the products they sold. A third (33 per cent) simply relied on
friends and family to recommend an adviser and one in six, go to their bank (16
per cent), building society (8 per cent) or insurance firm (7 per cent) for independent
advice – most of which is not independent at all.

Future Plan in practice

There are six core elements to FuturePlan, which will be customised to
reflect the specific benefits regulations in any country, in addition to
reflecting the needs of individual employers and employees within those

1. Written material A series of paper-based or online brochures which help
employees assess their current situation. Additional material which answers
more specific enquiries and gives more detailed information is also available

2. Group presentations FuturePlan uses group seminars for up to 30 people to
highlight the main issues surrounding retirement planning and to focus
employees on what action they need to take

3. Personal helpline assistance For those employees with specific enquiries
– for example, whether to make additional contributions into voluntary
contributions and savings programmes – FuturePlan call centre staff are on hand
to help

4. FuturePlan-Interactive An innovative system which can capture and store
data about each employee from a variety of sources. It enables employees to
develop financial plans that suit their needs and circumstances through a
variety of different planning modules. This enables employees’ to ‘predict’
their retirement income based on their current financial situation

5. Clinics Qualified consultants can regularly visit the workplace, to hold
clinics to assess and advise an employee on their individual situation.

6. Individual advice FuturePlan will assess an employee’s particular
financial position and advise in writing on an appropriate course of action to

Key benefits

– To the employer FuturePlan reduces the risk of litigation – employees who
are fully informed about financial planning, and who receive ongoing support
from their employer, are more likely to have their expectations met in
retirement. As the cost of providing regulated advice continues to escalate, a
low-cost but comprehensive alternative is of significant benefit.

– To the employee First and foremost, the employee greatly increases their
chances of benefiting from a secure and comfortable retirement. The employee
gains confidence as their financial knowledge increases, and receives enough
information to make appropriate financial planning decisions.


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