Nearly three quarters of charities have not assessed the impact of the 2012 legislative changes to pensions

According to research[1] undertaken by the Association of Chief Executives of Voluntary Organisations (ACEVO) and the employee benefits adviser, Foster Denovo, almost three quarters (73 percent) of charities have not as yet assessed the impact of legislative changes to their pension strategy. This compares to a figure of 84 percent in the same survey carried out in November 2008.

And, the proportion who are not aware of the legislative changes has reduced since last year’s survey from 16 percent in November 2008, to 12 percent in November 2009. Nearly half (49 percent) of those surveyed this year stated that they have considered the strategy they will adopt in preparation for the change. This compares to a figure of 34 percent for 2008.

When it came to the question of whether charities had considered the financial impact of auto enrolling relevant staff into a pension scheme, 47 percent of respondents stated they hadn’t. This is a decrease of 16 percent from the 2008 survey, which stood at 63 percent.

Once again, larger charities demonstrated that they are more likely to have considered their strategy; 83 percent for those with 500+ employees, compared to only 31 percent for those organisations employing 1-9 people.

Respondents were also asked what type of pension scheme they envisage offering employees in order to comply with the legislation, an alarming 29 percent of respondents were unable to respond to this question. 

Commenting on the survey, Nick Carey, policy officer at ACEVO, said: “Whilst these results are encouraging in suggesting more third sector organisations recognise the impact of the pension reforms, it is critical that wider sector employers are fully aware of and act on their upcoming responsibilities. There are still too many organisations which are either not aware of the reforms or have not adequately planned to meet them. The third sector must ensure it works on this complex issue and not leave it too late, forcing it to act reactively rather than strategically. Auto-enrolment will have a strong impact on the sector and it is vital that organisations are ready to meet this challenge.”

Ian Bird, senior partner at Foster Denovo, added: “Many third sector organisations have used the economic downturn as an opportunity to review their pension arrangements. Last year – for the first time – we asked charities about their readiness for the forthcoming pension reform, and rather worryingly, it would appear that many have still not assessed the impact. Although the results seem to be improving, there is still some way to go.

“This year’s survey also highlighted that 18 percent of third sector organisations do not have a workplace pension, and 54 percent of employers have less than 60 percent of staff enrolled in schemes. Moreover only 30% of organisations currently enrol their staff into a pension scheme immediately, which begs the question how will the majority of employers deal with the cost of auto-enrolment? These figures alone demonstrate to me that the financial implications of 2012 for the sector – as a whole – could be significant.

“Employers now need to begin addressing the potential costs of auto enrolment to their organisation. And, they also need to consider their strategy around effectively communicating this to their staff.”

Additional findings from the 2009 survey included:

  • 18 percent of organisations currently do not offer any type of pension scheme

  • Only 28 percent of third sector organisations have 81 percent of more staff in their pension scheme

  • Of the organisations with low take-up, 54 percent think staff cannot afford a pension, what will happen to these employees in 2012?

When it came to the recession, and whether this has affected employees’ attitudes towards retirement planning, 28 percent said it had. Two-fifths of those said that staff are more reluctant to save, and 30 percent said that fewer are joining their pension schemes. 

1. Employee Benefits Survey 2009/10 from ACEVO and Foster Denovo . Questionnaires issued to ACEVO members in August 2009. A total of 376 were returned, representing 20 percent of the membership.

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