Michael Whitfield, Managing Director, thomsons online benefits

1
How new pension rules will shape HR strategy
from performance management to flexible
retirement

• Michael Whitfield, Managing Director, thomsons
  online benefits

2
Why do you offer pensions at all?

• Pensions are always seen as a core part of your
  benefit offering
• Employees answer like Pavlovs Dogs yes pensions
  are the most important benefit to me
• You believe them!
• There has always been one in place
• Legacy of the Welfare State

3
How has your pension strategy evolved?

• Companies accumulate pensions over time
• Typical evolution DB ? DC ? GPP
• Changes with arrival of new MD/FDHRD
• Once there is a tick in the box leave it alone
• Change when you are told too - Gordon Brown /
  Pensions Act
• Merger / Acquisition / cost factors on DB

4
So why should you bother now?

• Act Discrimination - working till age 70? 75?
  80?
• A Day changes has simplified rules
• Continued flight away from Occupational Pensions
  schemes (FRS 17)
• State system increasingly devaluing
• New pension bill is coming (and it wont be the
  last!)
• NPSS will be with you in 2012

5
How should HR take the lead on pension issues in
the business?

• Employees
• Senior Management
• Communicate
• Educate
• Inform

6
Effect of legislation on managing pension
performance and resources

• Even with defined contribution schemes do
  employer have a duty of care to the employees in
  relation to choice of provider, default fund,
  investment performance?
• Pensions Regulator consulting on this issue

7
Effect of legislation on managing pension
performance and resources

• They expect Trustees, where appropriate
  Managers, Providers Employers to ensure that
• There is a robust selection process for
• Investment Manager(s)
• Fund(s) and regular performance reviews
• Even on GPPs!

8
Effect of legislation on managing pension
performance and resources

• A suitable fund or range of well managed funds is
  offered, especially in respect of the default
  fund and.
• Steps are taken to help raise members
  understanding of investment decisions, level of
  risk and potential impact on benefits.

9
Flexible retirement policies

• Changing demographic profile of workforce
• CIPD's annual Recruitment, Retention and Turnover
  Survey indicated 70 of employers are actively
  seeking to recruit people aged between 55 and
  pension age
• Becoming an employer of choice
• Now easier to stagger receipt of retirement
  benefits (take pension and still work part time)

10
Duty of care? Are your employees saving enough?

• Give them the tools to discover for themselves
  how much they will receive in retirement model
  what level of saving they need to make now to
  meet desired retirement income age
• Consider scheme design e.g. Plan today, Save
  tomorrow (tiered contributions automatically
  increasing with service)
• Communicate, Communicate, Communicate!
• Not just at joining but rolling programme
• Make info accessible up-to-date and accurate
• Give access to DWP state pension forecast

11
Pensions as a recruitment and retention tool

• 90 consider benefit packages when it comes to
  accepting a new ob
• Pension is top of wish list
• Yet 40 of companies do not provide details of
  their employee benefits package in recruitment
  adverts
• (BT Home Computing)
• (Employee Rewards Watch 2007)

12
Link between employee engagement and pensions?

• Engaged employees demonstrate willingness to go
  the extra mile
• The organisation must work to develop and
  nurture engagement, which requires a two-way
  relationship between employer and employee.
  (Institute for Employment Studies)
• A good well communicated pension scheme
  demonstrates your shared responsibility in
  looking after employees welfare
• International Survey Research's (ISR) Employee
  engagement index 2005 found that a third of UK
  workers are indifferent to their employer's
  success. For engagement UK is ranked 7th out of
  the world's 10 largest economies.