Acevo has warned charities not to delay preparing for pension reforms, as the government announces that it will defer auto-enrolment for companies with less than 250 employees this week.
Yesterday, the government announced that auto-enrolment for employers with 50-249 staff would be pushed back a year to 2014. It follows the announcement last year that organisations with less than 50 employees would start auto-enrolment of staff in 2015, instead of the planned 2014.
A new report from Acevo and Foster Denovo, which provides a guide to the upcoming pension reforms, urges charities not to defer preparing for auto-enrolment, despite the delays.
Nick Carey, policy officer at Acevo, says: “Clearly the pressure has eased off for a number of charities. However, whilst this may bring a sigh of relief amongst some employers, charities should not use this as an opportunity to ‘rest on their laurels’. Instead this time provides them with the opportunity to plan effectively, in particular the 31 per cent who are yet to adopt a strategy.”
The Acevo Pensions Survey 2011/12, finds nearly one third (31 per cent) of charities still need to consider their strategy in relation to upcoming pension reform. However, this figure does represent a decrease from the 47 per cent highlighted in last year’s survey, and the 51 per cent from the 2010-11 research.
When it comes to managing the cost of auto-enrolment, 18 per cent of respondents expect to use salary sacrifice to do so, and 15 per cent intend to use a proportion of future pay rises towards pensions contributions. A further 18 per cent of respondents anticipate that one fifth (20 per cent) of employees will opt out of auto-enrolment all together.
Ian Bird, equity partner at Foster Denovo, added: “Organisations also need to be mindful of the Retail Distribution Review (RDR) when preparing for the legislative changes. Yet, the survey we conducted indicated that nearly two-thirds (61 per cent) of organisations are not aware of RDR.
"From 1 January 2013, under RDR, pension providers will no longer be able to make commission payments to independent financial advisers to provide advice. Instead charging will be introduced whereby an adviser will charge a client an agreed amount for advice taken as an upfront fee or deducted for their policy.
“RDR could potentially limit the access that employees have to financial advice. It may also deter them for joining a pension in the first place. If charities are keen to support their workforce with financial advice, then it is important to plan for how they will pay for advice.”
The survey involved some 232 charities which are Acevo members.
