Some 14% of respondents expect the April 2016 reductions in lifetime and annual allowances to affect a significant number of staff, according to the Employee Benefits/Close Brothers Pensions research 2015.
From April next year, the annual allowance for those earning more than £150,000 a year will be tapered down to a minimum of £10,000, while the lifetime allowance for pension contributions will be reduced from £1.25 million to £1 million from 6 April 2016.
In addition, more than a quarter (26%) of respondents surveyed in September 2015 believe the reductions will impact a small number of employees, while 17% expect these to affect senior management.
However, less than one in 10 (7%) of respondents say their organisation will be unaffected by the changes, while a further 13% say the impact on their organisation will not be significant.
But, it appears that full implications of the reductions in lifetime and annual allowances may not yet be fully understood, with 13% of respondents claiming to be unaware how much of an impact these will have.
Determining which members of staff will be impacted by the reductions is an area of concern for some employers. For 5% of respondents this is further complicated by the nature of their organisation’s reward structure, which will make it difficult to easily identify the staff affected until the end of the year.
The upcoming allowance changes may require some employers to re-examine their reward strategies. Indeed, 5% of respondents will adjust their reward approach in the future for affected employees.
Communication is key
More than two-thirds (67%) of respondents are using communications to affected support staff.
A quarter (25%) of respondents are providing financial education seminars and webinars to members of staff affected by the changes, while 24% have turned to online information as an additional support mechanism for staff.
Respondents have harnessed a range of methods and initiatives to help employees affected by the changes, including modellers (17%), one-to-one financial advice (17%) and pension clinics (13%).
Increased reward to offset allowance reductions
More than a third (39%) of respondents will offer increased reward, such as additional remuneration or pay, as an alternative benefit to staff that are affected by the reductions to lifetime and annual allowances.
One-to-one financial advice is also on employers’ agendas, with 15% planning to offer it as an alternative benefit to affected staff. This is followed by alternative savings, such as individual savings accounts (Isas) and unfunded pensions, as cited by 9%, while 6% of respondents will offer shares as an alternative benefit to affected employees.
However, one-fifth (20%) of respondents do not know what alternative benefits will be made available to staff affected by the changes. Meanwhile, more than a quarter (27%) of respondents do not plan to offer any alternative benefits to affected employees.
Employee Benefits will be hosting a live webinar, Employee Benefits Wired: the changing pensions landscape, at 1pm on Tuesday 1 December. Tune in to EB TV to watch the session and send your questions by tweeting #EBWired.