News

Get ready for new pensions law, charities urged 1

Finance | Ian Allsop | 20 Jan 2009

Charities have been reminded of the potential cost implications of new pensions legislation in the wake of research showing that plenty are unprepared for it.

According to a survey undertaken by the Association of Chief Executives of Voluntary Organisations (Acevo) of 444 of its members, alongside employee benefits adviser Foster Denovo, 63 per cent of charities have not assessed the financial impact of 2012 pensions legislation.

Changes outlined in the government's plans for personal accounts and to state pension provision include the introduction of a retirement age of 68 from 2044 and a compulsory contribution from employers and employees to pension schemes.

This means that charities with pension schemes may not have factored in the cost of increased demand for pensions and should consider the possibility of budgeting for cost increases now, rather than taking a huge hit in 2012 when the law comes in.

Biggest impact for larger charities

Not surprisingly, larger charities seem better prepared for 2012, with half having assessed the impact the changes will have, compared with 4 per cent of smaller organisations. However, it is larger organisations that could face the biggest impact as they usually have a lower take-up on their existing schemes.

Ian Bird, senior partner at Foster Denovo, said: "When the personal accounts regulations come into force, employers will have to enrol employees in a personal account, or put the employee into an existing pension plan. Employers will also need to ensure that they have appropriate administration and communication processes in place to deal with auto-enrolment.

"For those organisations not currently offering a pension scheme to staff, the arguments for considering this now - as opposed to leaving it until 2012 - are compelling. There could be cost-saving implications and the exercise itself illustrates a commitment to employees. In our experience, well-constructed and communicated employee benefits schemes do help to attract and retain staff."

Survey results ‘alarming'

Seb Elsworth, head of strategy at Acevo, said the survey figures were alarming.
"Third sector leaders need to begin addressing the impact of the new legislation both in terms of their organisational strategy and the implications for staff."

Additional pension findings in the research (pictured) included that 82 per cent of charities offer an employee pension arrangement, and that 95 per cent offer to contribute towards these.

However, only a quarter of organisations say that more than 80 per cent of their staff are members of their pension scheme. Only a fifth of organisations offer a final salary scheme, and in all but 7 per cent of cases these are now closed to new entrants.

Tweet

Directory: Association of Chief Executives of Voluntary Organisations (ACEVO)
Who's Who: Seb Elsworth | Ian Allsop