A report has found that the rate of changes to pension compliance over the last five years has caused organisations to lose focus on their retirement objectives.
“Fit for Retirement”, a report by Towers Watson, found that 56% of UK businesses believe they have to prioritise compliance above any other factor when managing pension schemes. This is in contrast to competitiveness, attraction and retention, and helping employees to retire, which all gained significantly lower scores.
Recent years have seen:
- The introduction and then reductions of annual and lifetime allowances
- A greater focus on governance
- The end of contracting-out
- Reforms to defined contribution pensions
Phil Percival, head of Towers Watson’s FiT Age programme, argues that ever-changing legislation is causing employers to concentrate less on how to make their retirement packages suitable for their employees and more on simply keeping up.
“Such a flurry of change is preventing companies from focusing on the real reason for providing pension plans – either for the employer, in terms of attraction and retention, or, for the employee, in terms of their ability to retire.”
“With the number of people in employment aged over 65 already doubling in the last 10 years, employers need to make sure that they understand the financial situation of their workforce in order to gauge the extent to which workers will be able to retire. With this understanding, they can start to help employees more effectively plan for retirement at a time of their choosing, as well as planning their own workforce requirements in the near future.”
Employers are optimistic that the rate of changes will settle down soon, as just one in five believed that pension compliance will still be a top priority in the future. Towers Watson’s findings in the US, where pension regulations are more stable, backs this view as employers there ranked compliance as their lowest priority.