Filling the savings gap

first_imgShould employers be able to force staff to join pension schemes?  Simon Kent reportsKeith Astill Head of corporate personnel, Nationwide Nationwide agrees that effective action is needed to encourage people tosave sufficiently for retirement. We cannot pretend, however, that it will beeasy to persuade all employers that it would be in their interests to makescheme membership compulsory, however supportive they may be – in theory – ofpeople making better provision for retirement. Many employers are already struggling to maintain good quality occupationalschemes, and may feel that making all employees join will only increase thosecosts, which may result in the accelerated closure of schemes. If compulsory membership is merely an option rather than an obligation forall employers who run occupational schemes, the proposal has much merit. Many employers will wish to ensure their staff have access to the bestpension schemes affordable. But if compulsory membership is introducedalongside other initiatives, such as concurrent membership of other types ofsavings or pension arrangements, then employers may be able to continue with aslightly less generous form of defined benefit scheme, such as Nationwide’sCareer Average Revalued Earnings (CARE) plan. It is often argued that the low-paid cannot afford contributions to anoccupational scheme. There is never an easy solution to this problem, but webelieve that as long as contributions are deducted from pay at source, pensionscheme members can make appropriate personal budget adjustments. This, of course, was the position prior to the abolition of compulsoryschemes in the late 1980s. There cannot be sensible pension provision withoutsome immediate financial strain. To pretend otherwise would be disingenuous. We will either improve the pensions of our national workforce, or we couldpretend it will improve by using terms of encouragement alone. The lattercourse of action has already proven a failure, with the identification of ahuge savings gap. It would be entirely possible to sweeten the pill for low-paid members byallowing them a higher rate of pension tax relief – such as long-term savingscontributions, as opposed to the tax relief allowed on the more readilyaccessible accounts, such as ISAs. Keith Galliford Divisional director, RebusHRThe current proposal would reinstatethe situation removed by Parliament in the 1980s, whereby employers could makeit a condition of employment that staff joined the company pension scheme. Sucha move would kick-start people to consider their retirement, and would bebeneficial provided that both employee and employer contributions are pitchedat reasonable levels. Although many will criticise this as a curtailment of freechoice, experience indicates that in the absence of compulsory schemes,individuals do not commit to long-term pension investment. This is particularlytrue in periods of falling stock market values. Stella Eastwood Head of pensions policy, BTThe difficulty with compulsorymembership is that many employees choose not to join employers schemes forvalid reasons.  They may have otherfinancial priorities, for example, or have chosen an alternative way ofproviding for their financial security in retirement.  Another issue, is that the introduction of compulsorymembership may in fact cause many employers to reduce future benefit provision.This would not be a problem for BT, as we have always experienced a very hightake-up rate for our schemes. But for other employers, where the take-up hasbeen far lower, the additional cost of a significant increase in scheme membershipcould easily prove too much to bear, and have the opposite effect to thatintended.Ian Booth Deputy director of HR, National Children’s HomesNCH has a contributory superannuationscheme which all employees can join. Scheme membership is voluntary, and we donot believe that it would be desirable or appropriate to make membershipcompulsory. NCH has recently reviewed its pension scheme, which includedconsultation with the employees’ representatives, and it was not suggested atany point that the scheme should have compulsory membership.Steve Harvey Director, people, profit and loyalty, Micosoft UKI don’t think our employees should beforced to pay into a pension scheme, because they are bright, intelligentpeople, and we are lucky to hire them. What we can do, is make them financiallyaware, and then leave it to personal choice. We’re going down the flexible benefits route – we want to offerbenefits which fit in with that specific part of our employees life-cycle atthat time. We want to put our employees in control of their own lives. A bigpart of that is the ‘work-life balance’, but it’s also how we educate people,and how they manage stress in their lives. And part of that commitment ismaking sure financial stress doesn’t exist. Filling the savings gapOn 1 Sep 2002 in Personnel Today Related posts:No related photos. Comments are closed. Previous Article Next Articlelast_img read more

Jones run 1-2 at Raceway Park

first_imgJEFFERSON, S.D. (Aug. 13) – Glen Jones and son Casey ran 1-2 in Sunday’s Casey’s General Stock IMCA Sunoco Stock Car feature at Raceway Park.Kyle Welch had his hands full holding off Todd Boulware for the KCAU IMCA Northern SportMod checkers. Chris Mills’ move to the high side late in the race paid off with the Total Motors IMCA Modified checkers.Craig Clift paced the Golden Auto IMCA Hobby Stocks and Ramsey Meyer was the Z98 IMCA Sport Compact winner.last_img