Experts from Smith & Williamson discuss pensions and retirement planning for employees.

Four pension issues to consider:

1. Auto-enrolment is compulsory: Peter Maher, National head of Financial Services at Smith & Williamson says it is important to prepare for auto enrolment. It has been compulsory since October 2012 for all employers to put a pension scheme in place for all their employees. There will be significant financial penalties if this is not achieved.  It may be a few years before this is enforced but it is important that companies embrace technology and get the system working now.

2. Pension legislation changes: According to Dani Glover, a Director at Smith & Williamson, financial planning has become more complicated thanks to an increase in different products and frequent changes in legislation. It can be difficult for people to get to grips with their pensions, particularly as the cap changes every year. Smith & Williamson have been working hard to help people understand their plans.

3. There are different ways to receive pension funds: Paul Garwood, Head of Financial Planning at Smith & Williamson, argues that income drawdown may a better option than an annuity for people with a large pension fund. An annuity fund can be inflexible whereas income drawdown allows you to dip in as required. He also suggests that people on tighter retirement budget may benefit from phasing in their tax free cash.

4. Pensions are core benefit: Peter Maher, National head of Financial Services at Smith & Williamson believes that the core benefits are pensions, life assurance and permanent health insurance. A pension is only salary in retirement. Life insurance will protect your family while you’re employed, and health insurance will help if you can’t work. If the firm is big enough S&W would install technology to make it easier to administer these benefits.

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