NAPF: John Lewis Partnership’s head of pensions, Dinesh Visavadia, has slammed the inflexibility of auto-enrolment legislation because of its disconnect with the organisation’s business strategy.
Speaking at the National Association of Pension Funds’ (NAPF) annual conference in Liverpool on 19 October, he said: “It is the wrong kind of legislation for us.”
Visavadia also said The Pensions Regulator’s focus is short-term, which is one of a number of the organisation’s barriers to auto-enrolment. Others include the administrative burden of calculating employees’ pension contributions, particularly for employees who only work for the organisation for a short period of time.
Visavadia explained that John Lewis Partnership is required, under a self-imposed constitution, to provide for the retirement needs of employees who have spent all, or most of, their working lives with the organisation.
Access to a non-contributory defined benefit (DB) scheme is offered to employees after three years’ service.
“We prefer to focus our pensions spend on longer serving partners,” he said. “We have a long-term financial commitment, but regulatory pressures potentially impose short-term cash demands.”
He adds: “Provided we meet the minimum qualifications for auto-enrolment, why can’t we be free to provide pensions in the shape we want?”
Visavadia’s pensions regime wish list includes:
- a predictable and sustainable benefit that’s affordable in a wide range of economic scenarios.
- the right balance between investment in the business and profit to employees through bonuses and pensions.
- the highest level of pensions, focused on longer serving and lower paid employees.
I’m in complete agreement – how silly that a company that is known for its employee partnership focus and profit sharing, is forced to fit the mould. The focus on long-term savers and employees should be reinforced while not disadvantaging short term employees or younger savers. It is problems like this which Whitehall has completely failed to capture in designing AE…
John Lewis may prefer to concentrate their spend on longer serving employees, but in today’s fast moving world we mustn’t ignore the pension needs of any workers. Statistics from ONS show that around 30% of new starters will move on to another job within 12 months, and that isn’t just young employees either. The average number of jobs in a lifetime is now 11. These figures are why we have a short three month waiting period for auto-enrolment. Longer waiting periods, like the three year wait at John Lewis, would seriously undermine the number of years of pension saving in many modern day careers. Alongside auto-enrolment, “pot follows member” will enable these fast moving individuals to take their pension savings with them.
This one-size-fits-all pension bureaucracy is bound to cause issues, and those admin and cash-related ones discovered by John Lewis are among them, but by no means the worst of the bureaucracy and logical frustration. Temp recruitment businesses, for example, because of their very nature, have approximately twice most companies’ annual attrition rates on a weekly basis! That can mean 100 times the normal level of pensions enrolment bureaucracy!
The simple answer to the pensions shortfall (in addition to reducing the state sector burden) would be to increase NI to fund it and ring fence the extra cash collected. Yes, just another tax, but auto-enrolment is too if looked at in that way. However, our government does not have the guts to face the criticism it would get using this existing low cost and well understood NI collection mechanism, which will become even more slick after RTI is rolled out, so it has wrapped up the extra ‘tax’ in a complicated bureaucratic ‘stealth’ cover with enormous penalties for companies getting it wrong.
Auto-enrolment bureaucracy will put up the costs of doing business in the UK, thereby damaging our international competitiveness and potentially worse, deter the aspiration of many one-man bands that might have been looking to recruit to expand. They are the starting point for economic growth. Many are already inhibited and deterred from expansion, because of existing employment legislation risks and bureaucracy, and auto-enrolment has made those inhibitions a whole lot tougher to overcome.
There is good intention with this legislation. However, it has often been said that ”The road to Hell is paved with good intentions.”
There is more than one way of skinning a cat. Trying to do it with a mallet is not necessarily the best idea.
John Lewis should be leading the way and not bleating on about the administrative burdens auto enrolment brings. “Every” employer has to comply with this so spare a thought for the SMEs who so not have the millions to throw at this
Where Mr Vasavadia has a point is in the highly prescriptive nature of this legislation and the way it seems to over engineer the compliance processes. Further, the ONS stats quoted by Mr Boulding could also evidence the reason for such short-term periods of service, ie. that people leave just because their current employers steadfastly refuse to emulate the benefit standards set by employers like John Lewis.
Let us not lose sight of the fact that the quantity of compliance (the opt-out stats) that the DWP earnestly wishes to see to validate this exercise will do nothing to effectively bridge the gap between their modest pension outcomes and those promised by employers like John Lewis.
WEBOPS DO NOT LIVE CNTWBPS DO NOT LIVE
[url=http://www.forkshoes.com/short-boots.html]short boots[/url] short boots there [url=http://www.forkshoes.com/christian-louboutin-square-heel-tall-boots-black-406-lady.html]square heel tall boots black[/url] square heel tall boots black [url=http://www.forkshoes.com/christian-louboutin-sandal-in-black-528-lady.html]sandal in black[/url] sandal in black [url=http://www.forkshoes.com/pumps.html]christian louboutin pumps[/url] christian louboutin pumps . [url=http://herlay.com]jovani prom dresses[/url] jovani prom dresses at I don t seriously determine what time however you can possibly uncover that out, haha [url=http://www.forkshoes.com/christian-louboutin-flats-clb098-clb098-lady.html]black and red pumps[/url] black and red pumps . REVIVAL Sequence one ninth Medical professional (Christopher Eccleston) one 01 Rose1 02 The tip in the World1 03 The Unquiet Dead1 04 Aliens of London1 05 Earth War Three1 06 Dalek1 07 The Prolonged Game1 08 Father s Day1 09 The Vacant Child1 ten The Medical professional Dances1 eleven Boom Town1 twelve Terrible Wolf1 thirteen The Parting with the Strategies 2005 Holiday Particular tenth Medical doctor (David Tennant) two 00 The Holiday Invasion Sequence two tenth Physician (David Tennant) two 01 New Earth2 02 Tooth and Claw2 03 University Reunion2 04 The Woman within the Fireplace2 05 Increase from the Cybermen2 06 The Age
Are the rumours true that the pension fund cannot afford to pay out in June?.
They babble on about new rules by HMRC but all other pension funds seem to have taken it in their stride.
do not believe that all is well with the JLP pension fund. They have told their pensioners that under HMRCs real time initiative they will not get their pension payment on July the 1st but on July the 31st. They gave a number of spurious reasons and Visavadia tried to defend the initiative.To make matters worse they lied about the loss and kept telling its pensioners that they loose nothing in their life time. This of course is wrong the last payment will now be made after they die. They offered an interest free loan to cover the loss they say does not exist. Explain that. Under pressure the trustees ( now theres a misnoma) are looking at this decision again. That said pensioners are not holding their breaths that this grossly unfare decision will be relooked at.