Pensions & employee benefits roundup - September 2017

Gareth Davies, 28 September 2017

An article from Paul Lewis of BBC’s Money Box explored the evolution of the State Pension, drawing in comments from Michael Johnson of the Centre for Policy Studies.

One of the interesting comments to come out of this was the point that a fixed pension age is an “unfair lottery”. Examples were brought forward about the differences in life expectancy between a 65 year old man from Chelsea and one in Tottenham Green; the life expectancy for them was 88 and 71 years respectively which is a huge difference.

Is it possible to get “value” from this at an individual level and is this something we should look to achieve? The reality is that some people will die young and others will live for a long time wherever they live and the benefit that a pooled pension scheme, such as the State Pension or, indeed, an annuity or scheme pension, brings is that the retiree gets paid regardless of how long they may live for. Should both the Chelsea man and the Tottenham Green man be angry that an equivalent woman living next door will probably get better “value” out of her State pension?

So turning our attention to workplace pensions, we saw landmark changes to how people could withdraw their pension in 2016 – the so-called pension freedoms. This enabled retirees to take out all of their private pensions as cash.

The reality is that if you were to draw all of your money out as cash, some people will either die before their money runs out or, more worryingly, their money will run out before they die. A cheery statement, but this does go some way to explaining the winners and losers in pensions.

Unless you go for a pooled product is it even possible to achieve perfect value… you would have to die on the day your funds are fully exhausted.

The pension freedoms mean that today’s retirees now have the potential to make this judgement call. And getting this wrong could leave retirees with a significant shortfall if you out live your pension pot.

---------

Throughout the month our research team keep a close eye on what is happening in the pensions and employee benefits industries. Here is a roundup of the best news articles and stories for August 2017.

Average advertised salaries fall by 0.6%
Employee Benefits, 2 August

Average advertised salaries in the UK fell by 0.6% between June 2016 and June 2017, according to research by Adzuna. Its UK job market report: July 2017, which analyses online job vacancy data in the UK from over 500 sources, found that the average advertised UK salary decreased by 0.7% between May 2017 and June 2017, falling from £32,743 to £32,519.

BoE: Interest rates may rise faster than expected
Professional Pensions, 4 August

Interest rates may increase faster in the future than financial markets have priced in, the Bank of England's (BoE) deputy governor has said. Ben Broadbent said the central bank's monetary policy committee (MPC) considers there is a much greater need for this.

Death of retirement: Can the UK afford the state pension?
BBC, 6 August

Today nearly 13 million people - men over the age of 65 and women currently over the age of 64 - receive the state pension. A full one is around £160 a week (£8,300 a year) and one in seven pensioners - close on two million people - survive on nothing else.

Minister announces Data Protection Bill to bring GDPR into UK law
Professional Pensions, 7 August

The government will introduce a new bill to implement the European Union's (EU) General Data Protection Regulation (GDPR) into British law, it has announced. The Department for Digital, Culture, Media and Sport (DCMS) said the Data Protection bill will be laid before Parliament after the summer recess.

Brits relying on workplace pensions for a third of their retirement income
CIPD, 8 August

The poll by insurer Aegon also revealed that people in the UK were more likely to rely on their workplace pension pot than those in other countries. The average proportion of retirement income expected to come from workplace saving plans across more than 15,000 people surveyed from 15 countries was just a quarter (24%).

Mind survey finds men more likely to experience work-related mental health problems
Mind, 9 August

New research from Mind shows that men are twice as likely to have mental health problems due to their job, compared to problems outside of work. One in three men (32 per cent) attribute poor mental health to their job, compared to one in seven men (14 per cent) who say it’s problems outside of work.

Regulator carries out auto-enrolment spot checks
FT Advisor, 9 August 

The Pensions Regulator (TPR) has begun carrying out spot checks in Glasgow to ensure employers are complying with their auto-enrolment duties. Inspection teams will visit dozens of businesses in and around the city over the coming weeks to check staff are being given the workplace pensions they are entitled to.

43% believe financial penalties will help to close the gender pay gap
Employee Benefits, 10 August

Employee Benefits poll: Two-fifths (43%) of employer respondents believe that financial penalties would help to close the gender pay gap. A poll of www.employeebenefits.co.uk readers, which received 54 responses, also found that a similar proportion of respondents (41%) do not feel that financial penalties would be an effective way of tackling the gender pay gap.

Loneliness ‘as great a health risk as obesity’
Health & Insurance, 11 August

Loneliness is as great a health risk as obesity, a study suggests. Researchers found that social connections reduce the risk of dying early by 50%. They said being isolated or living alone increases the chance of dying prematurely at a rate equal to, or greater than, obesity.

Employment grows but wage growth to stay weak
HR Magazine, 14 August

UK employment will grow strongly in the third quarter of 2017 but wage growth is likely to remain weak, according to the latest Adecco Group and CIPD Labour Market Outlook. The quarterly survey of more than 1,000 employers found that near-term employment expectations have risen compared with the previous report (May 2017).

Nearly four in five workers want AE contributions to rise
Professional Pensions, 15 August

Over 80% of workers who qualify for automatic enrolment (AE) believe a workplace pension is good for them, a Department for Work and Pensions (DWP) survey has revealed. Meanwhile, another 79% said increasing both employee and employer contribution levels would also be good for them, with just 6% disagreeing.

Employees want more summertime perks
Reward, 15 August 

Summertime is important to most UK office workers, especially considering the unpredictability of the British Summertime. Keeping a workforce engaged, motivated and happy can easily be done with the introduction a few summer perks. 

Employee Absenteeism is on the rise
Reward, 16 August

In 2016 employers lost a median of 2.9% of their working time due to employee absence, this equated to 6.6 days per employee. This is an increase on the figures from previous years, data from 2015 showed a loss of 2.6% of working time or 5.8 days per employee.

Students prefer to work for living wage employers
HR Magazine, 16 August

The majority (93%) of students say they would be more motivated to work if their employer paid a living wage to all staff members, according to research from the Living Wage Foundation and the National Union of Students.

Generation Z ‘more motivated by teamwork than the average worker’
People Management, 17 August

HR urged to ‘use technology to its fullest’ to engage younger employees. Members of so-called generation Z are more motivated by teamwork, but less driven by flexible working, than the average UK employee, research has revealed.

One in seven Brits don’t use full holiday allowance
Health & Insurance, 21 August

One in seven British employees do not use their full holiday allowance, a poll has found. The survey of 2,000 British adults, commissioned by Monarch Airlines, found 49% of those who do not use their holiday allowance feel as if they do not have the time.

17% of over 55 year olds ‘unhappy at work’, reveals Robert Half UK
Recruitment International, 22 August

Research by Happiness Works on behalf of Robert Half UK has revealed that almost one fifth (17%) of people over the age of 55 are unhappy at work. Those in Generation X don’t fare much better with 16% of 35-54 year olds admitting they are also unhappy in their roles. 

UK leading the world rankings in workplace savings and retirement income 
Reward, 22 August

Despite concerns about employees affording to retire, it seems that UK employers are trying to ensure that their staff have a decent income when they finish work. A global study by Aegon on people’s retirement outlook revealed that the UK is world leading in ensuring that workplace savings are a key to providing retirement income. 

Without action, millennials will be pensioners in poverty 
City A.M., 22 August 

If it is a truth, universally acknowledged, that we have been living in a golden age of retirement, it must also be the case that the golden age will end. Does 2017 mark the tipping point? Pensioners today are nearly three times better off than their parents according to the latest ONS report, which looks at what has happened to the income of retired households in the UK over the past 40 years. 

Identity fraud reaching epidemic levels, new figures show
The Guardian, 23 August

Identity theft has reached epidemic levels in the UK, with incidents of this type of fraud running at almost 500 a day, according to the latest figures. During the first six months of this year there were a record 89,000 cases of identity fraud, which typically involves criminals pretending to be an individual in order to steal their money, buy items or take out a loan or car insurance in their name.

16% of millennials would give up employer funded gym membership for dogs
Employee Benefits, 24 August 

Just under a fifth (16%) of millennial respondents would sacrifice employer-provided gym membership in order to have their dog in the office with them, according to research by Purina PetCare. Its survey of 1,122 UK employees over the age of 18 and 252 senior managers or higher-level leaders, also found that 28% of employee respondents aged between 18 and 34 would give up employer-paid, on-site yoga classes in order to bring their dogs to work.

Over 90% say pension’s dashboard could help them save for retirement
Employee Benefits, 25 August 

Nine out of 10 parents believe that an online service showing all of their pensions savings would help them to save more for their retirement, according to research by Mumsnet, the parents network, on behalf of the Association of British Insurers (ABI) and the Pensions Dashboard Project.

Pensions more sticky than ISAs for debt-racked Britons
Corporate Advisor, 29 August 

Debt-bound Britons are more than twice as likely to cancel regular payments into ISAs than pensions, new research has found. Two-thirds of people with persistent unsecured debts have reduced regular payments into ISAs and savings accounts, compared to 26 per cent of those paying into workplace pensions and 43% of those paying into individual pensions, according to the research, which was conducted for Aegon. 

Government consults on return-to-work support
Employee Benefits, 29 August 

The government has launched a call for evidence on support for individuals returning to the workplace after taking time out to care for children and family members. The government has called for employers and individuals to share their experiences in order to inform its plans for supporting those returning to work following a career break.

UK employers say staff are distracted by personal finance problems 
Reward, 29 August

Productivity takes a hit when employees have financial issues at home, according to new research from Jelf Employee Benefits. The study shows that employers believe that money worries may be distracting nearly three quarters (71%) of employees, while 43% of organisations believe that staff absence from work in the last 12 months is down to employees taking time off to deal with financial problems.

Effective leadership and recognition can boost engagement 
HR Magazine, 30 August 

Effective management through encouraging, identifying and rewarding staff effort and loyalty is becoming increasingly important in the workplace, according to O.C. Tanner executive vice president David Sturt. 

About the author

Gareth Davies Head of Research and Engagement

Gareth Davies

Insight Research

Our research reports are aimed at Pension Trustees and HR Directors, covering topics such as pensions, health, flexible benefits, engagement and wellness. They are free to download!

Find out more

Contact round up team

If you would like to get in touch about any of the topics covered in this roundup, you can contact our team directly.

Get in touch