The pensions’ scene has been changing over the years with the closure of defined benefit schemes and the movement to forms of defined contribution where the risks involved have swung from the employer to the employee. This is especially pertinent for companies to manage the auto-enrolment of employees into a pensions savings schemes and also to be mindful of current plans for sweeping reforms to pensions’ rules which will introduce greater flexibility and more choice for pension savers.
Auto-enrolment provides for the participation of the employer as a ‘sponsor’ in providing access to a pensions saving arrangement – as well as a contributor to the individual employees pensions savings (colloquially known as ‘the pot’). The future risks of providing a pension fund may be resolved by a combination of individual enterprise and connected as part of the employment bargain with some facility from government as a “third leg of the stool.”
But the important connection will be between the sponsor (employer), the pension provider and the pension saver (individual employee).
Individuals will have to become aware of the need to ‘managing their future today’ taking into account the advice available and their own situation and preferences at different stages in their lives and careers – taking into account import factors involved in allocating deferred income for pensions in the context of their overall personal financial management and commitments including debt management.
Firms will need to ensure that their firms have a well-organised approach to pensions and in the context of the firm’s financial and employment relationships management – and may need to take stock to ensure that the approach is well focused and supportive to the purpose and profitable business future.
© November 2014