Why should employers give a damn about their staff’s retirement welfare?

retirement plan

It’s a straight question, a fair question and one that takes John Ralfe to ask!

In our subsequent conversation I introduce a historical context, Benevolent Conservatism- Disraeli- blah blah blah! John is having none of it.

In the course of dealing with small businesses and their advisers I get these questions frequently .

Why should an employer pay above the AE minima?

Why should an employer do due diligence on a workplace pension that already “qualifies” for workplace pensions?

Why pay above the minimum wage?

The answer is of course “you don’t” unless you want to – and we leave it that. Most employers don’t need a lecture they do what they like – which is what they think is the right thing..

After all the BBC can tell the licence-payers, as they are this morning that they are paying below the benchmarked “proper price for the job”, because of the cachet of the employer….that is the right thing for the BBC, the license payers and indeed for staff,

“Do you wanna make tea at the BBC?” sang Joe Strummer – clearly many do – and the BBC know it!

Total Reward

The total reward for working at the BBC is more than the pay, and (to John’s estimate) an over-generous pension; it is the value workers place on their job,

The question Government  should be asking is whether people are so exploitable that they need protecting from “bad work”. Matthew Taylor suggests that Government needs to intervene in the gig economy, as it did to get businesses to pay the minimum wage and auto-enrolment contributions on top. People do not understand total reward, do not benchmark their role against what may be available elsewhere and they may not even know what “good work” looks like.

This is why we have a trades union movement and why Government intervenes in the labour market. The issue is not whether employers have duties, it is to what extent employers need to pay beyond the minima (at the expense of other stakeholders).

Philip Hammond’s assertion that public sector employees get their reward as much after they stop working as when they work is largely right. This is  (certainly on Twitter) John’s #1 issue! His article in the Times “It is time to reveal the cost of public pensions” will require you dip into your total reward and accessing it via his blog is tricky…

john Ralfe2

Fortunately, I have made it through the high security validation process and can reveal in John’s own words…

Cabinet ministers are queuing up to say that the 1 per cent pay cap for public sector workers is unfair and unsustainable, and urging the chancellor to loosen the purse strings. But this  headline figure ignores the value of defined-benefit (DB) pensions to public sector workers, a big part of their overall pay and perks.

DB pensions, an inflation-linked pension for life, based on salary and the number of yearsworked, are all but dead in the private sector. They have been closed to new employees for many years and most smaller companies and many large companies — Marks & Spencer, Tesco, Royal Mail — have closed them to existing employees. DB has been replaced by much less generous defined-contribution (DC) pensions, a glorified savings scheme, leaving all the investment and longevity risk with employees.

Meanwhile, DB public sector pensions are flourishing, with more than five million employee members and all schemes — NHS, teachers, civil service, local government and armed forces— still open to new members.

How much is the annual public sector DB pension perk worth?…..

This article pre-dates Philip Hammond’s remarks, no doubt the Chancellor would like to know how much the “DB perk” is worth too.

I suspect it is what is underpinning public sector worker’s continued loyalty and commitment to public service; but unfortunately you cannot measure this on a balance sheet – until you take it away. Let’s hope no one tries that!

Yet John is right..

John is right to question why employers have to do anything for staff’s later life, after all their retirement negates any obvious value of their future labour.

Just because we have unions and labour regulations does not mean we should have these things and in re-engaging with the fundamental issue of whether an employer has a duty of care, we should not rely on conventional morality. If the mores of this country said yes, then has time moved on – do they now say “no”?

Is Auto- Enrolment a con? As John asserts it is

Is the Pension Regulators “tougher-quicker” stance just management consultant speak? As John asserts it is.

Is CDC a magic money tree? As John asserts it is.

John is right to question the fundamentals of our pension system, for if he doesn’t – who will. There is none other to articulate non-conformism as he does.

But John is also wrong

This is not just me being balanced, it is me at maximum conviction. The morality of this country includes an unsaid rule that employers should give a damn about their staff’s welfare. It isn’t written down – nor does Britain have a written constitution. We do not have to write some things down, we are confident in our own moral skin.

Employers have a moral duty to provide good work and that -to me – is an end to it. Good work includes a good end to work. If you as an employer decide you want to be a contrarian and do as little as possible (within the law), I will think the less of you as an employer. If you go beyond the law , pay below the minimum wage, avoid your employer duties under auto-enrolment, I will whistle-blow on you.

If we did not have conviction about good and bad work, then we would live in the kind of anarchy, Trump’s America could descend into. The breakdown of the morality that enabled Britain to build a welfare state and a voluntary pension system created by employers would be an awful thing for Britain.

John is a trustee of a defined benefit pension scheme and as such , he has a fiduciary obligation to his members. By accepting that role, I assume that he takes this duty responsibly – it is a duty that pre-empts a positive answer to the question on his tweet.

Good employers see the welfare of their staff as part of their business. It has been the same throughout Britain’s emergence and maintenance as a commercial power. John is right to question this, but he is wrong if he concludes that employers don’t give a damn.

The evidence is against him.

John Ralfe



About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
This entry was posted in pensions. Bookmark the permalink.

2 Responses to Why should employers give a damn about their staff’s retirement welfare?

  1. bobchampion says:

    John is right from a mathematical point of view, but wrong from the need to run a successful business.
    All in life cannot be explained by mathematics.
    Successful and enduring businesses have employees who are willing and able to go do whatever is necessary to bring success to their employer. They do this because they know their employer is treating them fairly in their current employment, ensuring they are equipped for their next employment and after employment.
    Employees who work for such employers become advocates of that business many years after they leave.
    Pensions are a component but not the only component of such a employee / employer relationship.

  2. The problem with these reports is that they deliver what whoever commissioned them what they want to hear.

    “The Government should interfere in the gig economy….” The gig economy has arisen PRECISELY because of government and EU interference – it becomes more and more expensive to employ people. The employers I know have downsized to match tighter budgets in a zombie economy. Quality of job candidates is poor. Services such as Upwork provide price favourable services to replace time serving staff.

    In the light of this, DP is now a caprice, and AE is simply another employment tax. Giving Fred a job will cost you £x per month. If he survives 2 years, he becomes more an more expensive, and harder to sack.

    Imagine the fun you have by employing Southern Railways drivers!

Leave a Reply