Pensions have been big news in recent weeks, leaving many organisations reeling from the proposed changes.
First, the recent Turner Report recommended the creation of a National Pensions Savings Scheme, where all employers pay into staff schemes. Then, on 6 April 2006 – also known as A-Day – employers will be forced to make changes to pension schemes to offer new features such as flexible retirement and the ability to spread pension contributions.
Almost one-third of employers believe that the biggest challenge in complying with the Pensions Act is communicating the changes to staff, according to a survey of 160 employers by Mercer HR Consulting.
With people issues at the heart of the pensions debate, the next few months could bring opportunities for HR to take centre stage. But do HR practitioners have the skills to take on the job?
Anthony Thompson, head of employment, pensions and skills at the CBI, says we are entering a new era, where HR’s understanding of pensions is going to have to improve.
“It is becoming a hugely complex area that requires a whole new set of skills and knowledge,” he says. “HR professionals have to be aware of how decisions made by the company affect pensions. Activities such as mergers, acquisitions and restructuring can have a huge impact. HR needs to show it’s on top of these issues so it can support other business functions when they make decisions.”
Charles Cotton, reward adviser at the Chartered Institute of Personnel and Development (CIPD), says there is no denying that pensions are set to climb the HR agenda. “Saving for retirement is going to be increasingly important, and HR has to be able to educate and communicate to staff what their options are. It also needs to be confident in explaining to staff the different rewards and risks involved in making a decision,” he says.
With pensions becoming a top-table issue, having an in-depth knowledge could also be a good way to impress the boss. “If HR professionals want to further their careers, it is essential they have a good knowledge of pensions and the changes taking place. They need to be able to talk confidently to the board about how demographic changes are affecting pensions and what actions may need to be taken,” says Cotton.
Many firms are planning to hire pension experts to advise them on the new rules. However, there is also strong demand for internal expertise as issues around pensions involve confidential information.
Thompson says: “If HR can say to employers they have these skills then they will become highly desirable.”
Cotton suggests HR practitioners take the time now to go on short courses and attend seminars that provide updates on pensions to ensure they stay in touch with changes as they happen. “Attending seminars will help HR get to grips with the changes,” he says.
Why should HR brush up on pensions?
- The Turner Report and the fast-approaching A-day have put pensions at the top of employers’ agendas.
- HR needs to confidently communicate forthcoming pension changes to employees.
- Due to confidentiality issues, employers are demanding in-house pensions expertise – making skills highly sought after.
- Understanding what impacts pensions schemes can help HR support top-level business decisions.