Is it an employer’s job to pay pensions?

I haven’t heard much demand to hear me talk about turning pots to pensions, but I have a burning desire to discuss pots and pensions with the members of Pension PlayPen.

I don’t intend to beat around the bush, we need new options that improve on investment pathways, we need brave trustees who use choice architecture to promote what they consider to be good options and above all, we need people to be aware that what they save towards their retirement needs their attention when they come to draw their money.

It needn’t be a nightmare, turning pots to pensions can be something that happens naturally, but it needs the people who work in pensions to make sure that the public get VFM and don’t get ripped off.

 

Should employers pay pensions?

Of course they shouldn’t. Employers need only to worry about sponsoring the workplace savings to at least AE minima. They have no obligation to pay people after they have left to retire,

But employers who have spent decades paying into DB and DC schemes, are entitled to be concerned if their employees are not – as a result – getting a wage for life , when they need it most (hint-in retirement).

If you had a choice as an employer of choosing a workplace pension that paid better pensions, wouldn’t you find that choice attractive? I would – and I’m interested in your views about how we go about it!

 

You can join the session from this link.

 

 

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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1 Response to Is it an employer’s job to pay pensions?

  1. Byron McKeeby says:

    I’ve updated an earlier blog comment for today’s blog.

    I don’t agree that employers have to “pay” or “provide” pensions when we also have state pensions and other opportunities for employees to save/top up towards retirement needs.

    Employers must, however, by law “contribute” to their workers’ pensions. In practice, some employers are much more generous than others.

    If you work in financial services or as a teacher, these two industries are on average the most generous when it comes to contributing to employees’ pensions.

    Companies in utilities, mining and quarrying companies and the fewer remaining manufacturing companies are also among the better for pension contributions.

    The least generous sector for pension contributions is agriculture, forestry and fishing.

    Those working in the accommodation and food service industries don’t have much to write home about either when it comes to the typical levels of their employers’ pension contributions.

    It’s a similar story for employees in the arts, entertainment and recreation sector, and also for many of those working in the administrative and support service industries.

    These various employer categories I’ve referred to do not cover all public sector employees, eg NHS, police, (who tend to enjoy higher benefits, whether funded or unfunded) or all of the many self-employed.

    It’s at least a start, however, towards a better understanding of which employers score higher or lower on “social” responsibilities within ESG when it comes to employee welfare.

    The nature of employment has changed for many, with far fewer “jobs for life”. Short-term contracts and other HR factors seem to imply that many will have quite a number of distinct employments over their working lives.

    I support “pot follows member” in DC space as a more effective way of avoiding a future where many accrue quite a number of relatively small pots in various different employments. You might say it’s a form of pensions consolidation.

    I leave it to others whether or not we really need to “consolidate” most DB.

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