Roger-Fairhead-SabMiller-NAPF-2014

Over 10% of employees at beer brewer SABMiller will have an annual pensions allowance problem within the next three years.

SABMiller, which started in the UK in 1999 and has a trust-based defined contribution scheme, offers age-related contributions to pension scheme members. “I think is slightly unusual. We think we are quite generous,” said Fairhead. “We give a very good match to employees and a high level of overall contributions”Speaking at the National Association of Pension Funds annual conference in Liverpool, Roger Fairhead, group compensation and benefits director at SABMiller, said: “Pensions are not suitable for 10% of our employees and for others it does not meet their financial priorities. So what is the future of pension at SABMiller? I don’t know.”

The company has a relatively high-paid workforce because of the nature of the roles. “And that presents a problem, particularly around the annual allowance. We are struggling with that at the moment,” he added.

Currently 4.8% of staff are caught by the £40,000 annual limit. Under the current contribution structure, an employee aged 56-60, receiving 24% contributions and earning over £167,000 a year would go over the limit.

Another 5.6% of SAB Miller pension scheme members will have an annual allowance problem within the next three years.

“So more than 10% of our workforce will be impacted in the next three years,” explained Fairhead. “So the question for us is: what do we do with them?”

SABMiller also surveyed staff on their financial priorities, which triggered a rethink on savings alternatives to a pension.

“SABMIller has a pension, it will be introducing a share incentive plan (Sip), and sharesave plan, corporate ISA and, of course, staff are free to invest their money in non-tax advantaged savings products as well,” said Fairhead.

“Assuming a £100 investment and a 40% tax rate and a 5% per annum return over five years, you get some interesting results. The Sip provides a better return than pension because it is tax free on the way in and is also entirely tax free on the way out. Not the 25% tax free amount for a pension. So is there an opportunity there. Sharesave has other risks attached to it, but nonetheless produces quite a good tax advantage return.”

“These [non-pension] products are also more immediately available to the majority of employees than those waiting until age 57,” he co