As the year comes to an end, the pensions, investment and employee benefits experts at Broadstone Corporate Benefits have been discussing what they think will be the big issues in 2015, and what to look out for.

Annuities

Matthew Brown, Executive & Retirement Services Director, says: “I’m really excited about annuities. I am a big fan of something that gives you a guaranteed amount of money, at the start of every month, no matter what the stock markets are doing, and I think annuities will remain popular with a significant amount of people who are risk averse. I also think we’ll see great innovation within the annuity market, especially with the facility to reduce annuities – for example an annuity that starts off high and reduces when your state pension kicks in, now state pensions are more generous.”

Auto-enrolment

Vanda Cox, Director-Corporate Benefits, says: “I think there will be a number of companies that will take a relaxed attitude to automatic enrolment or fail to understand the complexities and actions required. Until now the Regulator has been hesitant to issuing fines because it was keen to make AE a success, but I think its stance is hardening and that it is aware some companies will try to ignore it altogether in the hope they won’t get detected.”

Pension flexibilities

Simon Nicol, Pension Director, says: “I think there’s going to be a lot of angst about schemes not offering flexible options come April, particularly where Trustees are involved, but also for individual schemes. Although people may intend to take advantage of the flexibilities, in practice when they come to do it their scheme or insurance company is going to say ‘No, we’re not doing it’. So there’s going to be a lot of people who think they can take advantage but are going to have to move their pension somewhere to actually get the flexibilities. “I think that will cause a lot of grief amongst the public as to ‘what do you do now’. So the Government may take steps to strongly encourage schemes to offer these flexibilities; I think that will be a big point come April, and I expect to see a lot of headlines about that.”

Pension transfers

John Broome-Saunders, Actuarial Director, says: “It will be interesting to see how many DB scheme members try to transfer to DC schemes, to take advantage of the new flexibilities – and to what extent compulsory advice will act as an impediment to this. I think there’s a good chance that such advice will become increasingly – perhaps prohibitively – expensive, and we might start seeing complaints from DB scheme members as a result. Advisers themselves will blame regulation for increasing the cost of the advice, so we might see pressure on the Government to review its approach to advice regulation, to ensure that advice is accessible at reasonable cost to everybody.”

“My prediction is that all the money that is going to be released will end up in bricks and mortar. I think the UK mindset is that property is the best investment. The UK populous has a predilection to bricks and mortar as prices only go up – it would just fuel an already overcooked market.”

Advice

Matthew Brown says: “The angle I’m interested in is the part employers play in ensuring their senior people, with the biggest issues, have access to pre-vetted, sensible advice.

Employee Benefits

Clare Dare, Risk & Flexible Benefits Director, says: “We are definitely seeing a trend towards clients looking at platforms as a means of communicating benefits. Employers are increasingly thinking around wellbeing, trying to expand their offering for their staff and looking at more than just core benefits. Attracting and retaining talent is becoming even more crucial and our job is to support that communication piece, around ‘let’s make sure people understand their benefits’.”

Contracting out

David Brooks, Technical Director, says: “Contracting out 2016 schemes have got to get on with doing their Guaranteed Minimum Pension (GMP) reconciliation. It’s not very glamorous, but they’ve got until 2016 to do it and they have to get on with it – it’s really important. I think schemes should be doing that and be putting it into their business plans for 2015.”