13 December 2004 - Last chance saloon for voluntarism– Employer Task Force publishes pensions report
The Employer Task Force on Pensions today presented its report into occupational pension schemes to Alan Johnson, Secretary of State for Work and Pensions, with a clear warning that action needs to be taken if we wish to maintain the current voluntary system.
The Task Force was set up by the Government in July 2003. An employer-led body with union representation, its role is to consider how employers can help increase pension provision within a voluntary framework and to advise the Secretary of State on the role of employers in the pensions partnership.
Sir Peter Davis, Chairman of the Task Force, said:
“The Pensions Commission report demonstrated the huge pensions challenge we face in the UK today and, whilst employees must take some responsibility for their own pension provision, employers can and should play a major role in helping people save for their retirement.
“We at the Employer Task Force want the current voluntary approach to work and believe employers have an opportunity to build on and improve the current framework in a way that makes sense for business. But make no mistake, we are in a ‘last chance saloon’ for voluntarism and unless we can reverse the current decline in adequate employer-led pension provision and deliver increased savings from both employers and employees through the voluntary framework, the Government may be forced to look at more drastic solutions.
“We are calling on employers, employees and the Government to work together to ensure we address the challenges faced. We need a stable and well understood framework, increased demand from employees, clarity on who needs to save, and, for smaller businesses, a targeted incentive.”
The report makes a number of recommendations to employers, employees, unions, the financial services industry and the Government.
For employers:
- To recognise they have a responsibility to help fund the pensions of their employees
- To aim to achieve over time combined contribution levels of around 10-15%, with employers ideally providing 2/3 of this
- To recognise the importance of maintaining fairness in the shift from Defined Benefit to Defined Contribution (or other) schemes
For the Government:
- To provide a stable, long term framework for UK pensions with clear guidance on who should be saving, and achieve a broad policy consensus on the way ahead
- To provide stability for medium and large employers by maintaining current levels of financial support for pensions
- To tackle the challenge of pension provision among smaller businesses by introducing a new targeted financial incentive to encourage employer contributions.
For employees:
- To take responsibility for their own pension provision and contribute to their pension schemes
- To recognise employer support for pensions as a key benefit
For unions:
- To promote awareness of the need to save for retirement among their members
- To encourage their members to join good occupational pension schemes and to make contributions
For the financial services industry:
- To work with Government to review the annuities market
- To provide better service especially to smaller businesses
As well as including numerous examples of good practice in the report, the Task Force has produced a Good Practice Guide. The guide profiles 13 companies and provides practical guidelines on a range of issues, such as enrolment mechanisms and innovative pension scheme design. The guide will be a valuable contribution to the store of good practice and will be extremely helpful to companies when considering pension issues.
Dr David Allen, Vice Chairman of the Task Force, says:
“We consider good practice to be a valuable practical tool for companies to learn from and want this important work to be carried forward as an on-going resource for employers. We are therefore recommending that the Government brings together all the existing material on good practice into a single on-going website, as a resource for employers to help them meet the pensions challenge.”
Notes for editors
- The Employer Task Force was proposed in the Green Paper, 'Simplicity, security and choice: Working and saving for retirement', which was published in December 2002. The Task Force was set up by the Secretary of State for Work and Pensions in June 2003 and asked to report by the end of 2004.
- For full details of the membership of the Task Force and its Terms of Reference, as well as PDF copies of the Report and the Good Practice Guide, please refer to theTask Force web site, www.employertaskforce.org.uk
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