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Only 20 per cent of charities have considered impact of pension reform

Finance | Vibeka Mair | 20 Jan 2010

Just a fifth of charities have assessed the impact of the 2012 pension reform, which will see all employers, for the first time, having to automatically contribute to an employee’s pension, unless he or she opts out.

The finding, reported in the 2009/10 Acevo Employee Benefits Survey, is only a 4 per cent increase on the 2008 result (16 per cent). However, the proportion of charities who are not aware of the 2012 pension reform has reduced from 12 per cent to just 4 per cent this year.

The survey, which was compiled by employment firm Foster Denovo, quizzed 376 Acevo members on their employee benefits.

Of those charities which had assessed the impact of the 2012 pension reform, over half (52 per cent) had considered the financial impact of auto-enrolling all staff over 22 into a pension scheme with an employer pension contribution.

Larger charities are best prepared with 71 per cent of those with 500 or more employees considering the financial impact, compared with just 40 per cent of charities with 1-9 employees.

Further, almost half (47 per cent) of charities think their pension contributions will remain the same after 2012, while a quarter (27 per cent) believe their contributions will increase. This does not differ significantly by company size.

Current charity pension schemes

Currently, 82 per cent of charities offer some sort of employee pension arrangement, either contributory or non-contributory, with 81 per cent of staff taking up the offer.

The most common type of pension offered to new employees is a group personal pension (30 per cent) and an individual personal pension or stakeholder pension (27 per cent).

Only 6 per cent of charities offer a final salary scheme to new employees, despite 20 per cent having an existing final salary scheme. Of the small proportion with a final salary scheme open to new staff, two-thirds (67 per cent) say they are committed to keeping it open. This is a continual downward trend since 2007 when the proportion was 89 per cent.

On average, organisations offer a maximum contribution rate of 6.5 per cent basic salary, compared with 7 per cent in 2008.

Some 86 per cent of those surveyed offer all employees the same contribution regardless of their role or position. The average employee pension contribution is 5 per cent.

Only 34 per cent of organisations use ethical investment as a selection when choosing their staff pension.

The impact of the recession on pensions is low with 92 per cent saying they have not had to cut back their employee benefits due to the recession.

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Directory: Association of Chief Executives of Voluntary Organisations (ACEVO) | Foster Denovo