Many of you will have taken part in our recent survey of employers which we undertook in our ‘Jelf Employment Seminars’ in Manchester and London in October. I did promise to let you know the results once the blog was up and running (and if you are reading this, it is!) so here goes with the first part of the feedback.
There were several key messages that arose from the survey, and the first two we have chosen to bracket together, as there is a useful statistical and practical link between the two sets of data.
If you have read my recent post on our meeting with The Minister for Pensions (if not, the link is here :https://www.jelfgroup.com/blog/2010/11/meeting-with-the-pensions-minister/) you will note that I have always doubted how much representation employers with between 50 and 1000 employees receive when it comes to pension legislation change. This is worrying, as this grouping are generally the most exposed to the cost and administration headache of such change, so certainly need representation. Well our survey certainly demonstrated that you felt this to be the case also.
In response to the question: ‘Do you feel that employers with less than 1000 staff receive adequate representation representation regarding the impact of pension legislation changes?’, 133 of 181 respondents answered ‘no’. In simple terms, this is more than 73% (or nearly 3 out of every 4 employers represented at our events), which is a huge statistic and one that we have used both in our meeting with the Minister for Pensions and also in a recent press release.
Another question from the same survey was also of interest. The Retail Distribution Review (RDR) will have the effect of removing ‘traditional’ commission payments for new Group Pension Schemes from 2012. The actual process is known within the industry as ‘factoring’, which I won’t go into here, but suffice to say that many smaller employers (predominantly the same grouping as that outlined above I suspect) have, and do, use this approach as a way of helping to control their costs in the establishment of a pension scheme.
We asked the question: ‘Does your company currently remunerate your pension consultants via commission?’ . 50% of the respondents answered ‘yes’, so these employers potentially have an extra cost if they seek to change their scheme to cope with legislation challenges. But what of the others? Well, a further 4% ‘partially’ relied on commission, with another 20% ‘not sure’ of how their consultants were paid for. As a rule of thumb, if an employer is not sure how a consultant is paid for, it can generally be assumed that this is because the payment is via a commission. If we add these three figures up, we come to a potential 74% (again nearly 3 out of 4 employers from our event) who may be exposed to a change which is being inflicted on the industry and employers by the Financial Services Authority (FSA).
Whilst the intentions of the FSA are good, I do think this points to a potential problem for UK employers. With the national and company specific economy being generally on it’s knees, another cost in the establishment or change of a pension scheme is probably unwelcome, and for some beyond the pail. This directive may have the result in a few employers disengaging from pension saving for their employees, and this is bad news for all parties in attempting to solve the pensions savings crisis.
If you want to read an article on this, please try the following link:
Fundamentally, the two sets of data do intertwine. As I stated earlier, legislation hits this grouping of employers hardest (and the commission statistic supports this), but often the same grouping do not have a real voice in decisions. A real problem for the legislation makers!
I will cover other aspects of the survey in this blog in the coming weeks.
I would be interested in your comments on the above, so please post away if you have any thoughts.
Best regards
Steve
Speaking frankly, you are absolutely right.