Pensions in the UK employment sector
All employees working in the United Kingdom are entitled to be provided with a pension from the UK Government.
Some employers will also provide a private pension scheme operated through their company whereby a certain amount of the individual worker’s monthly wage is paid into a company pension scheme.
Accordingly employers are under an obligation to provide certain information to their employees regarding their pension rights.
As an employer should I be prepared to give my employees detailed information?
All employers in the United Kingdom should be prepared to offer their employees detailed information regarding the pension options for their employees.
This will also extend to the employer providing details to their employees regarding the pension scheme operated by the company.
What is the reason behind the requirement for employers to provide this information to their employees?
If an employer provides this kind of information to their employees it will enable the employees to gain a better understanding of the pension options available to them. In turn this will improve the retirement planning of those employees.
What details should I provide to my employees?
Employers should ensure that they provide the following details to their employees in relation to pensions:
- How employees can join specific pension schemes
- How much it will cost them to join a specific pension scheme
- How much the employer will pay towards the pension fund
- What specific benefits the scheme provides for
As an employer are there any organisations which I can refer my employees to be provided with information about their pension rights?
An employer may wish to refer their employees to specific organisations who will be able to provide that employee with financial advice regarding their retirement.
Which organisations should I refer my employees to?
An employer when asked by their employer for financial advice regarding their retirement should refer their employees to the following agencies:
- The Pensions Advisory Service
- The Financial Services Authority
As an employer should I provide my employees with financial advice regarding their retirement when questions are asked directly?
Employees must steer clear of giving their employees professional financial advice on investments as they are not legally able to provide this financial advice. It would not be practical for an employer to open themselves up to potential legal challenge in this manner.
Are there any circumstances when an employer is able to provide financial advice on investments?
The only situation whereby employers will be able to provide their employees with financial advice on investments if they are authorised to do so by the Financial Services Authority.
As an employer what should I then do if faced with any of these questions?
When an employer is providing information to their employees about their pension options they should ensure that they provide them with all the adequate information but that they refrain from providing financial advice.
Employees should be made aware of their options by their employers but when deciding on which potential investments to make this information must be provided by appropriate financial advisers.