The chief executives of CFG, NCVO and Navca have expressed their "grave concern about the detrimental impact of escalating pension liabilities on charities" in a joint open letter to Steve Webb, minister for pensions.
Signed by Caron Bradshaw (CFG), Sir Stuart Etherington (NCVO) and Joe Irvin (Navca), the letter is part of the umbrella bodies’ response to the DWP’s call for evidence on pensions and growth.
In it, the authors criticise the pension sphere’s “increasingly inflexible regulatory environment” and bemoan the “extreme caution" with which they believe decisions relating to overall pension scheme funding are taken.
Effects 'can be devastating'
“While such prudence appears sensible on the surface,” they write, “the long-term affordability of pension liabilities and deficit recovery plans to the sponsoring charity is given only fleeting consideration. The effects of this can be devastating on the sponsoring employer.”
They continue to say that many charities are unable to invest in services, merge or restructure because of the volatility of their pension schemes, and that front-line services are suffering.
“For some, closure is the only option,” they warn, adding that the upcoming auto enrolment is likely to exacerbate challenges around pension funding.
The authors praise the Chancellor’s acknowledgement in his autumn statement that defined benefit pensions regulation place a burden on employers, but insist that more should be done beyond the initial opportunity the consultation offers to improve the pension framework.
Focus on multi-employer schemes
The three CEOs urge the government to focus on protecting the long-term affordability of deficit recovery plans for sponsoring employers in the Pensions Bill 2013.
They express their particular concern about the 4,000 to 5,000 charities in multi-employer defined benefit schemes, and urge the government to review the legislation for these; explore options for a support fund, and create greater flexibility around the pension protection fund.
The letter can be read in full on the CFG website here. It is published alongside the three umbrella bodies' full Consultation response: Pensions and Growth, which can be read here.
