Pensions redrawn
It is difficult amid the many complex issues still being thrown up by the pensions debate to see exactly what HR’s role is in all this.
The message so far from all the experts is simplification. But the task facing HR is anything but simple. There has already been industrial and legal action from employees who sense their pension rights eroding. Steel workers at the Caparo Merchant Bar factory in Scunthorpe introduced an overtime ban when their final salary scheme was closed while Ernst & Young have had to bring out the big legal guns over proposals to switch from a final salary to a money-purchase based defined contribution scheme after their employees objected. Handled incorrectly, changes to any benefits could constitute a breach of employment contract, or at least a breach of the employer’s duty of trust and confidence (see analysis, page 12). Changes to pension schemes will also require extensive – and meaningful – consultation under the new laws headed this way from Europe.
But of course there is more to this than the letter of the law. Occupational pensions are at the very heart of the psychological contract between employer and employee. It’s clear that much more thought is going to be needed on how that contract should be rewritten and then communicated to workers, if recruitment and retention strategies are not to be wrecked. What exactly does the employer undertake to deliver if not future financial security? What can it expect in return? These are the questions that could make mere legalities look very trifling indeed.
Not only that, but as the role of the employer in pensions provision continues to change, HR will have the job of making staff aware of the options available for securing their futures. Will we see HR departments becoming financial advisers? Will access to such services have to become a cornerstone of employee benefit policies?
Yet again, for HR practitioners it comes down to communication and consultation – issues that some in business still see as soft, yet which are at the core of the productivity conundrum this country has yet to crack.
Heather Falconer, Editor [email protected]
