Staff 'leave pension cash unclaimed'

Cash Pension rules are undergoing significant changes at the moment

Employees of the UK's biggest companies are passing up an opportunity to inflate their pension pots, according to new research.

Workers are "leaving a lot of money on the table", according to consultants Towers Watson, by not taking up all the pension contributions on offer from their employers.

One in four FTSE 350 employers offer contributions of 10% to 11% of salary.

But to receive as much, employees have to increase their own contributions.

One of the traditional obstacles to doing so is that workers do not want to tie up a large chunk of their salary in an annuity - paid out as an annual retirement income.

But new rules being introduced from April in effect cancel any requirement for new retirees to buy an annuity. Retirees can take these savings as cash when they retire instead.

Will Aitken, a consultant at Towers Watson, said that he expected employees - especially older workers - to save more in their pension when the new rules come into force.

He has been among those who have argued that workers are failing to save enough to have a decent standard of living in retirement.

Huw Evans Huw Evans has concerns over the timescale for new rules

The figures come as a leading figure in the insurance industry claims that providers, regulators, the government and advisers are not ready for the April launch of the new pension rules.

Huw Evans, director general of the Association of British Insurers (ABI), will tell an ABI conference on Wednesday that lots of questions about the new policy remain unanswered.

"It is impossible to stand here six weeks before 6 April and say the government is ready - that is a statement of fact, not an attribution of blame," he will say.

His concerns include a lack of detail about how free guidance for new pensioners, called Pension Wise, will work.

There are also no plans by the Treasury to track the use of pension "freedoms", he will say, so officials will have no data to judge the success or otherwise of the policy.

"Critical pieces of the jigsaw are still missing and will not be in place in time," he will say.

"We also need to be careful to remind the public that 6 April is not a deadline, it is simply the start of new freedoms. People should not be rushed into making quick decisions about pension savings they may have accumulated over 30 years."

A spokesman for the Treasury said: "We welcome the ABI's commitment to these new freedoms and will continue to work with industry to ensure we are all ready.

"We ... are on course to meet demand for face to face and telephone guidance in April. In addition, we are working closely with the Department for Work and Pensions to deploy their resources to help manage any initial spike in demand for the service.

"We agree that people should take their time and not rush decisions."

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