CIPD respond to Pensions Bill

Employers should be encouraged to improve provision

Protection of company pensions should not only be risk based, but also shared between employers and employees, according to people management experts the Chartered Institute of Personnel and Development (CIPD).

Charles Cotton, Pensions and Employment Conditions Adviser at the CIPD, offered the following comments on the new Pensions Bill:

* Pensions protection fund levy - risk based approach:
We are concerned that the flat rate levy provides a disincentive to move quickly to a risk based levy, despite Government assurances. If the Government is confident that a risk based levy can be put in place quickly, they should move straight to it without delay. This should concentrate minds.

* Pensions protection fund levy - sharing responsibility between employers and employees:
There is a strong argument for sharing the burden of pension protection between employers and employees. Consideration should be given to making these schemes voluntary - with employees determining whether their scheme is protected or not. Where the majority of employees vote to protect their pension schemes, payment of the levy should be split equitably between employers and employees. In all parts of the pensions process, individuals need to recognise their own responsibility to cater for their needs in retirement.

* Attitude to pensions:
We must move away from seeing pensions as being a purely financial matter to be considered by accountants and actuaries. The skills gap and the consequent competition amongst employers for the best employees should encourage companies to look at the impact that an attractive, well-funded pension scheme can have on their ability to recruit and retain the people that will make their business succeed.

Our research shows that companies are not telling employees enough about pensions. Although 88% of companies tell staff about pensions during recruitment and induction, only 46% keep staff updated on an ongoing basis. Employers are failing to communicate their pensions arrangements effectively after recruitment, which means that the full value of their rewards package is not appreciated, and employees don’t often understand the full importance of issues such as saving enough for their retirement.

* Tax breaks:
More thought should also be given by Government to encouraging companies to provide good pension schemes, through the use of tax breaks and other incentives.

Notes to editors
* For more information on the CIPD’s Reward Management Survey, published Monday 10 February 2004, contact Emma Price on 0208 263 3240 / e.price@cipd.co.uk

* The Chartered Institute of Personnel and Development (CIPD) has over 118,000 members and is the leading professional institute for those involved in the management and development of people