Only 790 employers pay into their own DC workplace pension.
What role do employers have in their staff’s pensions?
They are responsible to paying over contributions , enrolling and re-enrolling staff and choosing a workplace pension.
But nowadays the core functions of company pension schemes have been contracted out to a TPA or transferred to an insurer and the responsibilities of companies
Apart from the 790 who survive in TPR’s “pension landscape” , there are no employers running their own DC pension schemes for their current employers. It’s all contracted out.
Those who manage these “workplace” pensions have targets based on assets under management not income paid. There is no target for deferred pay anymore. The responsibility for employers to pay a retirement wage has is all but over.
Whatever became of deferred pay?
The further contraction of company pension schemes means more employers in multi-employer savings schemes that do not offer deferred pay. The new workplace pensions offer a capital sum and the offer of annuities and drawdown but this is a long way from the company pension paid through the employer’s payroll.
Is it any surprise that employer’s are walking away from what was known as pensions?
The big challenge for the pensions industry is to reignite the interest in “deferred pay” as what pensions offer. Otherwise, “pensions” will slip away from reward and into an extension of national insurance.
Employers had better started getting interested in value for money in what’s paid over to these multi-employer schemes. The recent work of CAPAdata suggests that if conversion factors were applied consistently to the capital sums arising from the various workplace pensions offered by insurers, consultants and the odd mutual, it would become obvious that some schemes are overpaying others – some schemes horribly under paying.
How will pension poverty become clear to the public?
Whatever happened to deferred pay may return and there will be three ways for this to become public;
- People’s workplace savings will be shown as the regular income that pots will buy (on the pensions dashboard).
- CAPAdata will start showing who is delivering VFM and who isn’t (this will be followed by the Pensions Regulator and FCA (in their own time)
- CDC pensions and guided retirement income from DC pots will reintroduce the idea of a pension rather than a pot.
It is only a matter of time till savers and their “their union representatives”, will be joined by consumerists such as Martin and Paul Lewis in calling out pension saving in terms of their pension outcomes.
It is an exclusive system, exclusive to good employers who take care of their staff’s welfare. There is 40% of our working population who are not earning the deferred pay and will be dependent to get by in later life on the state for income. That is not a good place to find youreslf.
Do we want a pension system that looks like this? This is what pension poverty looks like when you have no one left but the state.
This picture is of course a metaphor for pension poverty. It will not be literal for Britain but it is how social insurance works in India for those with no deferred pay for a lifetime of work.
