Reward Live: Expert panel debated what 'good' looks like in pension provision
It was a healthy debate at last week’s Reward Live, when the great and the good in pension were gathered to discuss ‘what good looks like’, with the consensus being that employers need to do a lot more to make their pensions better.
“We’re at a crossroads in terms of what the industry thinks is good – which is a minimum of 10% total (employee and employer) contributions to secure a good post retirement income – and where legislation is currently at – which is only getting us to 8%, and not for some time yet,” argued MartinuParish, area director, Aon Employee Benefits. He added: “Good has to focus on where legislation doesn’t measure up.”
According to Justin Tate, managing director, The Pension Quality Mark (which only accredits schemes where 10% contributions are made), contribution have rightly become the area of focus, but that because it’s one of the few areas that can be accurately monitored.
She said: “Unfortunately it’s a lot easier to look at contribution levels than say, standards of governance and communication. While the latter two should also be the focus of good pensions, but they are much harder to gauge in terms of what standards are being reached.”
She added: “Everyone underestimates how much retirement income they’ll need, and how long they’ll live, so it’s imperative employers do more to become employers of choice by offering better than minimum terms.”
Ian Gutteridge, director, Premier, argued the only way to tackle greyer areas of pensions standards is to create better systems and standards for benchmarking. He said: “We all need to know providers are hitting outcomes for service levels.”
He suggested: “Maybe a better service standard for pension providers should be to ask them whether they hit percentages such as x% of the workforce knowing what their pension decisions will be.' He said: 'With this sort of measure, at least you would be able to infer employees have been properly communicated with.”
Said Parish: “The problem is, at some point, employers will have to decide what their employees’ end point will be. But we’re not seeing organisations come up with draw down options because they don’t know what their members will do.”
Gutteridge added: “Part of the problem is that providers have not yet come up with products that allow people to move their money about. This will change, but at the moment, providers are trying to work out where the market it moving.”