21st August sees one of horse racing’s biggest meets, when the Ebor Festival hits York Racecourse.

Tens of thousands of punters will descend on the Knavesmire (where, by the way, highwayman Dick Turpin met his demise) to gamble and generally hand money over to those modern day highwaymen known as bookmakers!

For most this will be a great day out and gambling in moderation can be fun as long as it’s under control. However, many of us gamble continually with our pension pots without realising it.

workplace-piggybankDue to apathy and lack of understanding, many pension scheme members pay little attention to their retirement savings, with little to no interest in where their hard-earned cash is invested, whether or not they’re contributing enough and what level of income they will have in retirement.

Before Pension Freedoms were introduced in 2015, the amount of risk most retirees could take with their pension pots was a lot lower, and the risk was largely one of timing as individuals shopped around for the most competitive lifetime annuity rate (the securing of a guaranteed income for life from a private pension pot).

From 2015, even after taking benefits, the freedom to draw down income at any rate means that many people are now unwittingly gambling on their future income when they choose the level of withdrawals they wish to take.workplace-coin

Although annuity rates have offered seemingly low rates of income in recent years, they do offer security of income. With drawdown, retirees are, simply put, gambling on their life expectancy and investment returns – will they outlive their savings? If this happens then it is likely to be too late to want to enter the workplace again, so will this mean more retirees will fall back on the State for support?

Incidentally, whilst annuity rates look poor compared to a generation ago, it’s worth bearing in mind that they compare well with other forms of guaranteed income e.g. savings account interest rates. And let’s not forget that when typical annuity rates were in double digits, inflation as well as bank interest rates were also sky high.

Now more than ever there’s a need for employees to understand and plan for retirement; and taking advice or guidance before making decisions is crucial.

So how do you help your employees? Do you facilitate retirement presentations or 1:1 meetings for your staff as they approach retirement? We have a wide range of communication strategies to help, so your employees can gamble on fun things like the Ebor Festival and not their retirement.

Posted by Leon Farrar

Topics: Workplace Savings, York

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