25/01/12
By Andrew Holt
This year’s pensions research undertaken by ACEVO and employee benefits specialist, Foster Denovo, indicates that nearly one third (31 percent) still need to consider their strategy in relation to the upcoming pension reform.
However, this figure does represent a decrease from the 47 percent highlighted in last year’s survey, and the 51 percent from the 2010-11 research.
Auto-enrolment will kick in – for the largest organisations – during 2012.
But, at the end of November 2011, the Government announced its plans to defer auto-enrolment for employers with 50 staff or less from April 2014 to May 2015.
In addition, those employers due to begin auto-enrolment from July 2013 may see their staging dates deferred — the Government is due to announce the revised schedule imminently.
Organisations due to begin auto-enrolment before July 2013 will not be affected by these changes.
Nick Carey, policy officer at ACEVO, commented: “Clearly the pressure has eased off for a number of charities. However, whilst this may bring about a sigh of relief amongst some employers, third sector organisations should not use this as an opportunity to ‘rest on their laurels’. Instead this time provides them with the opportunity to plan effectively, in particular the 31 percent who are yet to adopt a strategy.”
When it comes to managing the cost of auto enrolment, 18 percent of respondents expect to use salary sacrifice to do so, and 15 percent intend to use a proportion of future pay rises towards pension contributions.
A further 18 percent of respondents anticipate that one fifth (20 percent) of employees will opt out of auto-enrolment all together.
Ian Bird, equity partner at Foster Denovo, added: “Organisations also need to be mindful of the Retail Distribution Review (RDR) when preparing for the legislative changes. Yet, the survey we conducted indicated that nearly two thirds (61 percent) of organisations are not aware of RDR.
"From January 1st 2013, under RDR, pension providers will no longer be able to make commission payments to independent financial advisers to provide advice. Instead charging will be introduced whereby an adviser will charge a client an agreed amount for advice taken as an upfront fee or deducted from their policy.
“At a time when people are being encouraged to start saving for their retirement, RDR could potentially limit the access that employees have to financial advice.
"It may also deter them from joining a pension in the first place. If charities are keen to support their workforce with financial advice, then it is important to plan for how they will pay for advice.”
Following on from the research, Foster Denovo has launched a definitive guide to pension reform.
The guide will be presented to ACEVO members at the organisation’s AGM on 25 January, 2012.
It includes details around staging dates, choosing a pension scheme, contribution levels and legislative requirements.
Here, Foster Denovo highlights the 10 key questions every organisation needs to ask about 2012 pension reform:
1. Do you know your ‘staging date’ for auto-enrolment?
2. Have you considered the cost of auto-enrolment?
3. Do you have a suitable workplace pension scheme in place already?
4. What pension contribution levels will you offer employees?
5. Do you know which categories your employees fall into for auto-enrolment?
6. Are you fully aware of what the legislation entails and what this means for your organisation?
7. Do you have appropriate systems and procedures in place to deal with auto-enrolment?
8. Have you got an internal team in place to manage auto-enrolment?
9. How will you communicate the changes within your organisation?
10. Have you sought professional advice or support?
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