Pension changes? What pension changes?
More than 1 in 5 businesses haven’t informed staff about pensions changes, due to come into force on 6th April. Christina Jordan reports
Many employees throughout the country are unaware of huge pensions changes that are due come into play next month.
Large numbers of businesses have failed to inform their employees of the imminent changes to their pension schemes as a result of A-Day, according to a recent survey by Prudential.
More than one in five (around 8,000) companies with 50 or more employees acknowledge that they haven’t communicated the implications of A-Day to their staff. And only 11% of businesses claim that they have developed and completed their communications programmes to employees.
The most worrying statistic is that 8% or 3,000 businesses indicate that they are not planning any communications programmes to inform their staff of the new rules aimed to simplify company pension schemes.
The research compounds the current concerns about pensions, with many people failing to save enough for retirement, businesses closing their schemes, and a final salary scheme black hole of more than £100 billion.
The new rules – considered to be the most radical overhaul of pensions since 1908 ?will be introduced on 6th April 2006. The aim of the legislation is two-fold: to simplify the pensions system and to encourage greater pension investment.
But Dave Harris, corporate pensions director at Prudential UK, says that communication of the changes is vital. He says: “The lack of employee communications is one of the key reasons for the pension crisis. It’s always been a challenge for employers to interest staff in pensions. Failing to inform and educate their staff about the pension reforms will result in greater confusion and prevent more employees from participating in company pension schemes. This will exacerbate the pension crisis and is bad news for employees looking forward to a comfortable retirement.”
Christopher Jordan, a receptionist in a Manchester-based financial publishing company, says that his bosses have said nothing about the changes. “When I had been at the company for a year they talked to me about the pension scheme and I signed up to it. But they haven’t said anything about a change to pensions rules or how I will be affected. I guess I’ll have to check this out for myself if these changes could affect my pension.”