IofAM: Prompted on Pensions
Running anything – let alone a trade association – is never easy, but to do it with your head buried in the sand requires not only a certain level of athletic ability but also a facility for decision making without the benefit of evidence and information. Risky, one might think, but plenty of association CEOs are choosing to adopt this position when it comes to the government’s upcoming changes to pensions. Lulled into a false sense of security by the phasing in of ‘Auto-enrolment’, many employers have assumed that it will be ages before the rules are applied to them; that they are too small to be affected; or the rules will suddenly and magically disappear!
The reality is of course that none of the above is true, and that the changes affect all workers including full-time, part-time, agency, zero-hours, offshore – even possibly contractors on the payroll – aged between twenty-two and the state pension age. In other words, an awful lot of people, as IofAM members who attended the Association’s latest seminar recently found out. On hand to give them the bad news was Mark Stevens, an employee benefits consultant with Close Brothers, a specialist financial services group with expertise in banking, securities, and asset management.
The changes came about as the result of the realisation that the ratio of working people to pensioners fell from 10:1 in 1901, to 4:1 in 2005, and looks set diminish to 2:1 by 2050, according to estimates from the Department of Work and Pensions. The alarm having been raised, Lord Turner, Chair of the Pensions Commission 2003-2006, set out the new ground rules, which included a fairer and more generous State Pension; low cost pension aimed at low-to-moderate earners; automatic enrolment into workplace pension schemes; and compulsory minimum employer and employee contributions.
All well and good, you might think, but even the Pensions Regulator is quoted as saying ”Employers should be under no illusion: implementing auto enrolment will take time, including assessing the suitability of their existing pensions arrangements or choosing a scheme, and adapting their payroll, HR, pensions and IT systems” – and that was in December 2011! The fundamental message is that there will be no escape from the 270 pages of legislation, and that all employers will have to comply between now and 2016. And if you think that’s a long way off, think again, as most IofAM members will have to comply within 12-18 months! Not only that, but they will come under increasing pressure from their own members to provide them with advice and guidance as the deadlines draw closer.
Finally, if nothing else convinces you that it’s time to take advice, then a quick look at the penalties for non-compliance will surely do the trick. An infringement at stage two of the process can incur a fixed penalty of £400 – a wake-up call for the unwary – whereas daily penalties escalate from £50 – £10,000 for serious and persistent offenders, dependent on the number of employees. But, if you still want to go it alone, it’s time to get stuck in. The first step is to collect complete and accurate data; assess your workforce; model the financial impact; and then establish a qualifying Workplace Pension Scheme. Then you can move on to assess payroll processes and functionality, review the market, and select appropriate technology solution(s). After that it’s just a case of communicating compliantly; continually assessing your workers; managing Opt-in/Opt-out; and maintaining you record keeping. Easy!
The Institute of Association Management (IofAM) is an independent professional body made up of managers and senior staff responsible for the management, development and governance of trade bodies, professional institutes, societies, chambers of commerce, voluntary organisations, charities and other representative groups. The purpose of the Institute is to develop, promote and share best practice for the benefit of IofAM members and all those involved in the governance of associations. To achieve its objectives, the IofAM offers a forum for education, training and development, dissemination of information, networking, and research.