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Majority of charities unprepared for the legislative changes on pensions

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Charities are not prepared for the impact of the 2012 legislative changes on pensions and three out of 10 have no idea what type of pension to offer their staff.

According to research undertaken by the Association of Chief Executives of Voluntary Organisations (ACEVO) and the employee benefits adviser, Foster Denovo, almost three quarters (73%) of charities have not as yet assessed the impact of legislative changes to their pension strategy. This compares to a figure of 84% in the same survey carried out in November 2008.

And, the proportion that are not aware of the legislative changes has reduced since last year's survey from 16% in November 2008 to 12% in November 2009.

Nearly half (49%) of those surveyed this year have considered the strategy they will adopt in preparation for the change. This compares to a figure of 34% for 2008.

When it came to the question of whether charities had considered the financial impact of auto-enrolling relevant staff into a pension scheme, 47% of respondents stated they hadn't. This is a decrease of 16% from the 2008 survey, which stood at 63%.

Almost three out of 10 charities (29%) were unable to say what type of pension offering would be available to employees to comply with legislation.

Larger charities demonstrated they are more likely to have considered their strategy: 83% for those with 500 or more employees, compared with only 31% for those organisations employing between one and nine people.

Currently 18% of organisations surveyed do not offer any type of pension scheme, 28% of third-sector organisations have 81% or more staff in their pension scheme and 54% think staff cannot afford a pension.

Ian Bird, senior partner at Foster Denovo, told HR magazine: "There needs to be a phenomenal amount or work around this issue - we have seen some improvement since 2008, but much more is needed.

"Employers need to think about how generous they are with their schemes, how much they contribute and how much the cost would be if they had 100% enrolment - and they need to budget for this now to make sure they can afford it."

Discussing the fact 54% of employers surveyed think staff cannot afford a pension, Bird said: "There is still a lack of awareness and mistrust in pension schemes, this leads to fear and fundamentally all this has got to change. I work with an organisation that offers all employees 4% pension contributions, without staff needing to contribute. They only have 40% take up and it's free money."

And Nick Carey, policy officer at ACEVO, added: "While these results are encouraging in suggesting more third-sector organisations recognise the impact of the pension reforms, it is critical that wider sector employers are fully aware of and act on their upcoming responsibilities.

"There are still too many organisations that are either not aware of the reforms or have not adequately planned to meet them. The third sector must ensure it works on this complex issue and not leave it too late, forcing it to act reactively rather than strategically.

"Auto-enrolment will have a strong impact on the sector and it is vital that organisations are ready to meet this challenge."