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.
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 income.
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.
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