As the move from DB to DC pension schemes continues, employers are helping staff take a more holistic approach to workplace savings, says Debbie Lovewell
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Just 4% of respondents now only operate a DB arrangement, while 71% only offer DC and 25% offer both types of scheme. More than half (54%) offer a GPP as their main pension scheme, while 38% do so as a secondary plan.
Some 18% operate a stakeholder scheme as a secondary plan, 22% offer a final salary DB scheme on this basis, 10% a Sipp, 6% a trust-based DC scheme, and 2% a hybrid DB/DC scheme and career average DB scheme.
In the next year, 17% aim to bring in a new pension to replace or add to existing schemes.
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Many employers now recognise the importance of helping staff take a more holistic approach to saving and money management. This includes a focus on shortand medium-term financial planning, as well as making long-term retirement provisions.
In the past 12 months, a number of products such as corporate individual savings accounts (Isas) and online platforms for staff to manage their workplace savings in one place known as corporate wrap platforms, employee wealth platforms or employee savings platforms have been launched, with more in development.†
These also enable staff to make the most of tax breaks, for example by rolling the proceeds from a maturing share incentive plan into a pension or corporate Isa. It is still fairly early days for these products, so it will be interesting to see how this market develops.
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Offering a pension plan through a flexible or voluntary benefits scheme can enable employers to enhance their pensions provision for staff at little additional cost to the business.
Where employers have a core level of pensions provision in place, offering pensions alongside this through a flex or voluntary plan will enable employees to voluntarily boost their retirement savings provision.
On the flip side, where an organisation offers only a basic pension scheme with no requirement for staff to join or make contributions, offering a plan on a flexible or voluntary basis means that those who want to do so can make greater provisions for their retirement.
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Two-thirds (66%) of employers now enable staff to make pension contributions through a salary sacrifice arrangement. This is up on the 58% that did so in 2010, perhaps because more employers recognise the national insurance savings to be had. Where employers do not offer staff this facility, it may be due to the perceived complexities involved or concerns about the continuing availability of tax advantages.
A much smaller proportion of respondents enable staff to take advantage of additional tax breaks on pensions (other than those available on contributions), with 58% making no provision for staff to do so. But this is an improvement on the 67% that said so in 2009 and 71% in 2010.
Where employers do enable staff to take advantage of extra tax breaks, sacrificing bonuses into a pension fund appears to have grown in popularity, with 38% of this year's respondents making provision for staff to do so, compared with 26% last year and 28% in 2009.
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