The Chartered Institute of Payroll Professionals ……………………………………………………………Policy News Journal
Cost of running a defined benefit scheme up by 37% year on year 19 December 2016
In the PLSA’s latest annual survey, the findings highlight costs for operating defined benefit (DB) schemes have increased by 37% in one year.
The Pensions and Lifetime Savings Association (PLSA) has published its 42nd Annual Survey. Findings include:
Since 2015, the mean running cost of DB schemes has increased by 37% from £400 to £546 per member. This is largely driven by increases in fund management and custody costs, up 32%. Smaller schemes, those with 5,000 or fewer members, have seen the greatest rise in running costs with an average increase of 63%, to £787 per member. In 2016, only 10% of DB schemes were open to new members compared to 21% in 2015. That figure is only 4% in the private sector. Rising costs, as well as economic volatility and low interest rates, are proving key factors in the decision to close to new members. “Our analysis highlights a continuing problem for DB schemes. Higher operating costs, especially for smaller schemes, combined with widening deficit levels mean DB schemes are under pressure as never before. We can’t ignore the resulting risk to members’ benefits for all but the most strongly funded schemes and for these members the risk is they will lose 15-20% of their benefits. “Our DB Taskforce is currently collaborating across the pensions sector to develop recommendations on how we can change the industry to improve outcomes for members and schemes. Our Annual Survey clearly shows that the running costs of a DB scheme is considerable for all schemes – and even greater for smaller schemes. With over 6,000 private sector DB schemes in the UK the Taskforce will explore the potential of scheme consolidation to deliver better value to scheme members and sponsors.” Joanne Segars, Chief Executive, Pensions and Lifetime Savings Association, said:
Further details can be found in the PLSA's press release .
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Employers invited to give the gift of pensions education this Christmas 22 December 2016
This Christmas, UK employers are being encouraged to give their employees the gift of Get Ready, a free online pensions education tool.
This Christmas, leading financial education charity the National Skills Academy for Financial Services , in partnership with AXA Investment Managers, is encouraging UK employers to give their employees the gift of Get Ready, a free online pensions education tool. A recent Skills Academy poll found that 3 in 4 UK adults agreed that they found the current pensions system "complicated and confusing". Get Ready seeks to address this through a series of interactive learning modules that use an array of engaging animations, audio clips and quizzes.
By giving their employees access to this tool, organisations have a chance to help their employees plan for their retirement, giving them the knowledge and confidence to take practical steps towards their long-term financial security.
Fujifilm Speciality Ink Systems in Broadstairs is one of many organisations across England who have already benefited from using Get Ready, helping their employees improve their understanding of the pensions process.
Malcolm Frier, HR Director at Fujifilm commented: " We adopted the Get Ready tool to inform our employees as widely as possible about pension saving and latest reforms. The format is intuitive to use and is well-presented in concept and format, which helps to easily understand a complex subject. This is a tool that is really very good, it breaks down quite complex information into accessible language for all employees and really makes clear what options they have. We've made it available to all staff on Defined Benefit pension schemes transferring to a Defined Contribution pension and any existing Defined Contribution members. So far, those who have used it have found it very informative."
The Chartered Institute of Payroll Professionals
Policy News Journal
cipp.org.uk
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