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Fears that NPSS will force pension & job cuts are vastly overstated say thomsons online benefits
Fears that the introduction of compulsory pension contributions will force UK employers to decrease their pension contributions and slash jobs have been vastly overstated, according to new research carried out by leading reward provider, thomsons online benefits.
When asked what action they would take as a result of the introduction of the National Pension Savings Scheme (NPSS), just 1.2 per cent of companies plan to reduce their pension contributions (so called “levelling down”), and only a handful of companies plan to reduce employee headcount (5.1 per cent) or implement a recruitment freeze (2.6 per cent).
These findings were among a number of insights revealed in the fourth and largest ever annual “Employee Rewards Watch” research, in which 522 UK firms took part.
Other key findings for 2007 include:
Reward Strategy
• The majority of companies (64.0 per cent) do not have a written reward strategy;
• Eight out of ten respondents (80.5 per cent) have reviewed their reward policies to ensure that they comply with Age Discrimination legislation.
Communication
• The biggest issue respondents reported in relation to their employee benefits was that they were not well communicated (reported by 43.0 per cent);
• More than two in ten respondents offer total reward statements either on paper (13.3 per cent) or web-based (10.1 per cent), and around a third of respondents (31.9 per cent) stated that they plan to implement them;
• The biggest challenge reported by respondents who had implemented flexible benefits was communicating the change effectively (58.9 per cent).
Employee Benefits
• Almost half of respondents with benefits (45.3 per cent), did not know how much they were spending on them as a percentage of payroll;
• Less than five per cent of respondents (3.9 per cent) thought that their employees highly valued their employee benefits.
Flexible Benefits
• Since the inaugural Employee Rewards Watch survey in 2004 there has been a marked increase in companies not only offering an employee benefits package (15.5 per cent rise), but also the numbers who are considering, are in the process, or have already implemented a flexible benefits scheme (up from 17.5 per cent to 35.3 per cent);
• Around seven out of ten respondents (71.1 per cent) who are considering or in the process of implementing flexible benefits are hoping to implement them this year;
• Three quarters of respondents with a flexible benefits scheme in place reported it had assisted employee recruitment (74.6 per cent).
Pensions
• Respondents who do not currently have any employee benefits were asked how they would deal with the planned introduction of compulsory pension contributions at three per cent. Around a third of respondents (30.8 per cent) stated that they didn't know what action they would take;
• When asked whether the introduction of compulsory employer pension contributions would resolve the pensions crisis, around seven out of ten respondents (68.2 per cent) did not think that it would.
Salary Sacrifice
• Following the shock withdrawal of the Home Computer Initiative in April 2006, respondents were asked how this had affected their views on the future of salary sacrifice benefits. Although the majority of respondents (51.6 per cent) claimed it had made no difference to their views on salary sacrifice, around a third of respondents (33.7 per cent) claimed that it had made them less confident about the future of salary sacrifice benefits;
• This year saw a nearly 20 per cent increase in respondents who had implemented salary sacrifice from 39.8 per cent to 59.0 per cent.
Michael Whitfield, managing director of thomsons online benefits, comments: “Employee Rewards Watch has become a benchmark publication for the HR industry documenting all the key trends and developments in the reward arena. The results surrounding companies planned response to the introduction of compulsory pension contributions bear out what we are hearing when talking to the UK's top employers.”
”The main focus for HR teams is the struggle to attract, retain and motivate the best talent. Measures to cut back on benefits such as levelling down on pension contributions simply do not fit into this strategy.”
“In fact the opposite is true. Most UK employers are looking to improve their reward packages as indicated by the twenty per cent increase this year in companies who have implemented salary sacrifice benefits and the dramatic increase in the predominance of the flexible benefits in the last four years”.
“Far from buckling under the pressure of the introduction of compulsory pension contributions, employers are showing resilience and putting faith in their own pension arrangements above those forced on them by the government. Indeed around seven out of ten employers don't even believe that the introduction of the NPSS will do anything to resolve the pensions crisis in the UK.”
“However, the fact remains that despite this focus on enhancing reward packages most HR teams do not have a written reward strategy let alone a way of measuring its effectiveness. Until HR have a firm grip on the basic metrics such as how much they are spending on employee benefits they cannot possibly start to reward intelligently and ensure that they extract maximum value from their reward spend.”
- Ends -
Notes to editors:
1. Copies of Employee Rewards Watch 2007 are available on request by calling 020 7802 5855, or by visiting http://www.thomsonsonlinebenefits.com/Register.
2. Michael Whitfield, Managing Director of thomsons online benefits is available for interview on request. Please contact the press office on 020 7802 5855 to arrange this.
About thomsons online benefits
thomsons online benefits offer a unique approach to reward. Since our inception, our vision has been to transform employees' appreciation and understanding of their reward package and to remove the administration and communication headaches organisations suffer as a result of running them. The result is an intelligent reward strategy which adds measurable value to your business.
Our combination of innovation and quality has led to us winning eleven awards and attracting a prestigious portfolio of clients including Avon Cosmetics, Betfair, Getty Images, MTV, the Ministry of Defence, Reed, Regus, Smith & Nephew, Vanco plc and Westminster NHS Primary Care Trust.
thomsons online benefits currently service clients in over 16 countries from their offices in the UK and Singapore.
thomsons online benefits ltd is authorised and regulated by the Financial Services Authority.
Further information can be found at www.thomsonsonlinebenefits.com
For more information contact:
Caroline O'Keeffe
Tel: 020 7802 5855
Email: press@t-bx.com
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