Leading reward professionals have a good understanding of the new pension obligations placed on employers that will come into effect in October 2012.
In an interactive poll that took place in the opening keynote conference session of the Employee Benefits Summit in Monte Carlo, 20% of delegates said they were very familiar with their obligations, and 53% said they have a broad understanding of these but need to familiarise themselves with them more. A further 27% are aware of the changes but not of the details.
Under the terms of the incoming reforms, employers will have to automatically enrol staff into a qualifying workplace pension scheme and make compulsory contributions for members. Personal accounts will also be introduced into which employers can enrol staff in place of an occupational scheme.
But understanding of the new legislation may have been hampered by confusion that surrounds some aspects of the reforms, particularly personal accounts. Speaking in the session on ‘Communicating pensions and savings benefits to employees’, Graham Vidler, director of corporate services at the Personal Accounts Delivery Authority (Pada), said: “There are some myths that have built up around the reforms and personal accounts’ place in these.”
He added these include the suggestion that personal accounts can only be used to meet the legal minimum requirements, when, in fact, employers and employees can contribute more if they so wish.
Read more myths surrounding personal accounts.
To overcome such misconceptions, Pada is to embark on a comprehensive communications campaign in order to educate employers, explain the features of personal accounts and engage pension scheme members with the new legislation. “One of the problems we have with pensions reform is not only that people are not aware they need to do something, they are actively avoiding it,” said Vidler.
He added that Pada has not yet decided which media this communication strategy should use in order to enable it to make use of the most appropriate methods of communication at every stage. This delay in decision, will ensure that it does not use outdated forms of communication and can make use of new channels when they emerge, such as Twitter. “All we can do now is lay down the principles of communication. If we do not lay down the messages numerous times using multiple [channels], people simply aren’t going to get it,” Vidler explained.
When it comes to preparing to implement the new legislation, 58% of Employee Benefits Summit delegates said they have already started to take action to implement the changes. A further 12% plan to begin in the next six months and 19% will start to do so in 2012.