HR directors have been warned that Britain's occupational pensions system is "broken" but it is not too late to fix it.
Speaking at the National Association of Pension Funds' (NAPF) Conference last month, the pensions body's chief executive, Joanne Segars, made a rousing call to employers to invest further in occupational pensions, after revealing Britain has two or even three-tier pension workforces and growing inter-generational pressures. She said: "There can be no doubt that our pensions system has become more expensive, less adequate and less sustainable. They are more expensive because, as Lord Turner pointed out, the cost of providing pensions has doubled since many were first set up. And they are less adequate because we have all seen contributions and coverage fall.
"Britain's pensions system is broken," she added. "Can we fix it? Yes we can and we must.
"Of course we could just take the easy option and let it all wither on the vine," she continued, "but I think history probably tells us that the withering on the vine approach catches up with us sooner or later."
Segars called for more robust decision making from Government, adding: "We need better engagement from politicians. Now is not the time for them to tinker. We need bold decisions."
Also speaking at the conference was pensions minister Steve Webb.He admitted the current situation on state and occupational pensions is "wholly inadequate", but claimed the "glass is half full" and predicted a much brighter pensions landscape in the future. He confirmed the Government's commitment to auto-enrolment in 2012 and reiterated that it would put the system in place, according to the already agreed timetable.
He said for employers already offering an adequate scheme fit for auto-enrolment in the certification scheme the Government would be "as light touch as possible". He added: "It is encouraging we have high-quality defined-contribution (DC) schemes in the UK. We need to get out of the 'DB is good, DC is bad' mindset."
Segars responded: "We all know workplace pensions work best. It is only workplace pensions that can effectively deliver scale, reach, high standards of governance, risk management and trust. And in so far as employees trust anyone when it comes to pensions, they trust their employer.
"In other words," she added, "people still value pensions highly and believe that they can and should be provided through the workplace. So it's not surprising that employees value pensions as the most important employee benefit after their salary. They value them more than bonuses and flexible working hours put together.
Even generous holiday entitlements don't come close.
"Those employers that do not promote pensions are at risk of missing out on attracting top talent," she added. "Our labour market may not be the tightest it has ever been, but we still all want to attract the best staff. So come on," she urged, "let's not be afraid to mention the pension."
The NAPF has written to the CIPD and the Recruitment and Employment Confederation, urging them to raise this issue with their members in the HR and recruitment professions.
Segars stressed the pressing need for action: "We have to be alert to the problems, and must recognise that the workplace pillar of pension provision is crumbling. I'm not talking about reviving defined-benefit pensions nor am I talking about unpicking the 2012 legislation. Britain's pension system may be broken, it may have got past the stage where a few running repairs will do. But we can fix it, we must fix it and I am confident that we will."
FIGURE IT OUT
80% would be more likely to apply for a job if the company offered a good pension
80% of private sector, defined-benefit schemes are closed to new entrants
73% of private-sector workers do not belong to a workplace pension
44% of people think that a pension is the best way to save for retirement
12% of job ads carry pension information
Source: NAPF.
