Pensions and reward strategies are the two key issues facing benefits decision- makers this year – according to the Chartered Institute of Personnel and Development (CIPD). The race to shut down defined benefit (DB) schemes is set to continue in the private sector, with one-third of firms planning to close plans to new members in the next year. But only 8% of manufacturing organisations will wind up their final salary schemes and no public or voluntary sector employers have made that decision yet.
The CIPD’s Reward management survey found that reducing future risk is the most common reason for changing pension arrangements, cited by 42% of employers. Cutting the cost of providing plans is a worry for 36% of respondents, while the same number said making a dent in funding deficits is a priority. At the moment, more than half of employers offer a DB plan for existing staff, while a quarter offer defined contribution schemes. Stakeholders are offered by 22% of organisations and group personal pensions by 21%. But just 39% of employers offer DB plans to new staff. Amid growing concern that Britons need to save more for retirement, a quarter of respondents said they expected to increase the employer’s contributions this year.
A fifth also expect to raise staff contributions. When it comes to responsibility for benefits, the HR department calls the shots in four out of five organisations. In 7% of organisations, the task falls on the finance department. While pension changes are busy taking up a fair proportion of time, nearly half (45%) of employers have developed, or are in the process of developing a written reward strategy aligned to their business strategy. In firms with over 5,000 employees this figure rises to 62%. The reasons for shaking up the strategies around perks include rewarding, recruiting and retaining high performers, linking pay to the market and maintaining market competitiveness. Sick pay is still alive and well, with more than eight-out-of-ten employers offering the benefit. Around four-out-of-five grant holidays above the statutory minimum and two-thirds of organisations provide private healthcare.
employAlthough 63% of employers throw a Christmas party for workers just 59% of employers supply staff with free tea and coffee or cold drinks. HR departments are embracing the electronic revolution; 62% said they use the internet to communicate benefits. In 60% of workplaces, line managers communicate what’s going on and just under half give staff presentations on perks. When finding out workers’ perspectives on packages, four-out-of-five organisations said they survey staff. Just over two-thirds of employers ask for opinions at exit interviews and 28% pick up feedback from trade unions or staff associations. Thanks to the government tax breaks for vouchers coming in this April, childcare provision is in vogue. The vouchers were the benefit most likely to be introduced over the coming year, followed by employee assistance programmes and car loans.
The CIPD’s Reward management2005 survey can be downloaded at http://www.cipd.co.uk/onlineinfodocuments/surveys.htmSource: CIPD