Philippa Lamb discusses pensions with Pensions Minister, Steve Webb , Charles Cotton, CIPD Public Policy Advisor, Reward, Steve Rumbles, Head of UK DC Pensions at BlackRock and Tim Taylor, Head of Reward and Recognition at TUI Travel UK and Ireland.
Steve Webb, Minister for Pensions says that people will find that the basic state pension of the future will be just that: basic. Steve Rumbles is concerned that people don’t even understand how the state pension works, let alone any other form of pension. Listening to comments from people Philippa Lamb meets on a London street, it becomes clear that pensions of any sort have been largely neglected by the majority of employees.
Philippa points out that when the new legislation is passed, every employer will be need to enroll eligible employees into a pension unless they specifically opt out. The Minister explains what the new rules will achieve, but Philippa wonders how the Government can make sure that a large proportion of the population doesn’t opt out. Listen to why the Minister thinks this is unlikely to happen.
Charles Cotton, CIPD Advisor, thinks that legislation may succeed in helping people to save for their old age, given certain conditions and a touch of human nature. He also thinks that, to some extent, it depends of the sort of business in which the organisation is engaged. Educating employees as to their choices will be vital.
Tim Taylor explains that TUI Travel already has two separate pension schemes but many have not joined. When the new law is passed he is optimistic that a significant number of employees currently outside the schemes will sign up. Steve Rumbles is also optimistic that people won’t opt out and both he and Tim think that embracing this new scheme will be a challenge for HR people, but, over all, a challenge worth taking up and getting right.
The Minister points out that the National Employment Savings Trust (NEST) has been set up to help employers and to ensure that the costs of setting up are kept to a minimum. Listen to him explain how this will happen.
Philippa reminds us that state pension age is also very likely to increase and asks Steve to explain why this is necessary. Philippa wonders what will happen to those who already contribute to a pension; won’t these people decide to opt for the cheaper, new scheme and wouldn't they be better off staying in the company scheme?
Philippa wonders how the Government will communicate the new auto-enrolment concept and invites Steve Webb to help out. Listen to his reply. Tim Taylor thinks that although the Government will do its best, HR teams in organisations will still be doing a lot of work to help their employees. HR has a big part to play; it must get the strategy right plus the payroll and reward systems and capabilities running efficiently. HR must learn to look ahead to see when individual employees fulfill the criteria for auto-enrolment, especially as there seem to be no automated systems on the market and none is planned.
Useful links to further information
In August we published our quarterly focus on the projected pension regulations. You may find it help to have this additional information.
The CIPD has also published some recent research: Business case for pensions, on the issues covered in the podcast, it provides some useful reading.
You may also like to see a survey - Employee attitudes to pay, 2010 which has a bearing on how pensions are perceived
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