Personnel Today
  • Home
    • All PT content
    • Advertise
  • Email sign-up
  • Topics
    • HR Practice
    • Employee relations
    • Equality, diversity and inclusion
    • Learning & training
    • Pay & benefits
    • Wellbeing
    • Recruitment & retention
    • HR strategy
    • HR Tech
    • The HR profession
    • Global
    • All HR topics
  • Legal
    • Case law
    • Commentary
    • Flexible working
    • Legal timetable
    • Maternity & paternity
    • Shared parental leave
    • Redundancy
    • TUPE
    • Disciplinary and grievances
    • Employer’s guides
  • AWARDS
    • Personnel Today Awards
    • The RAD Awards
  • Jobs
    • Find a job
    • Jobs by email
    • Careers advice
    • Post a job
  • XpertHR
    • Learn more
    • Products
    • Pricing
    • Free trial
    • Subscribe
    • XpertHR USA
  • Webinars
  • OHW+

Personnel Today

Register
Log in
Personnel Today
  • Home
    • All PT content
    • Advertise
  • Email sign-up
  • Topics
    • HR Practice
    • Employee relations
    • Equality, diversity and inclusion
    • Learning & training
    • Pay & benefits
    • Wellbeing
    • Recruitment & retention
    • HR strategy
    • HR Tech
    • The HR profession
    • Global
    • All HR topics
  • Legal
    • Case law
    • Commentary
    • Flexible working
    • Legal timetable
    • Maternity & paternity
    • Shared parental leave
    • Redundancy
    • TUPE
    • Disciplinary and grievances
    • Employer’s guides
  • AWARDS
    • Personnel Today Awards
    • The RAD Awards
  • Jobs
    • Find a job
    • Jobs by email
    • Careers advice
    • Post a job
  • XpertHR
    • Learn more
    • Products
    • Pricing
    • Free trial
    • Subscribe
    • XpertHR USA
  • Webinars
  • OHW+

InsolvencyLatest NewsPensions

What employees need to know about pensions protections

by Katherine Easter 2 Jul 2021
by Katherine Easter 2 Jul 2021 Many employees don't know that their pensions are protected in the event of insolvency
Shutterstock
Many employees don't know that their pensions are protected in the event of insolvency
Shutterstock

Employees are understandably concerned about the safety of their retirement savings when they read about insolvencies or the collapse of big company pension funds. This is why it’s crucial to communicate the robust protections that exist to preserve them, according to Katherine Easter.

In a year where the news agenda has been relentless, high-profile company insolvencies – and their impact on associated pension schemes – have still managed to grab the headlines.

Pensions

Pension Schemes Act hailed as landmark

What you need to know about the Pension Schemes Act 2021

Against this backdrop of economic uncertainty, it’s reasonable to conclude that many defined benefit (DB) schemes members are concerned about the safety of their personal finances and pensions.

But what perhaps you, and many of your employees might not know about, are the robust pension protections that exist in the UK to safeguard the financial futures of millions of UK pension savers in a worst-case scenario.

If a company has an associated DB pension scheme, members of the scheme can be reassured that if the worst were to happen and their employer failed, their pensions would be in the safe hands of the Pension Protection Fund (PPF).

What protections are in place?

The PPF provides pension protection for members of private sector DB pensions across the UK in the event of employer insolvency.

This means any employees who currently pay into or have previously paid into their employer’s associated UK DB pension scheme (excluding public sector schemes) will be protected if their employer fails. The days of people losing the pensions they’d saved their whole lives for are thankfully behind us.

Our protection follows employees too – regardless of the health of the organisation, and how long an employee stays with the business before retiring or moving to a new job.

This means that PPF protection is essentially an “invisible” added employee benefit for staff who are DB pension savers. However, awareness of this important benefit is often low.

It is critical for employers to communicate these protections to relevant employees, particularly in these uncertain times. As HR and talent professionals, we have a critical role in raising awareness of this employee benefit.

By equipping your teams with information about pension protection and the PPF, you can ease employees’ nerves, and stop people making rushed or hasty decisions that might not be in their best interests.

However, understandably there are several communication challenges that can act as barriers.

The pension “taboo”

First, pensions are complicated. Many people don’t understand how they work (not least the different ways that DB and DC schemes work), which can often be a barrier to meaningful engagement with the topic.

It’s always easier to talk about more tangible workplace benefits – whether that’s gym discounts, or healthcare benefits – as opposed to those like pensions which can seem abstract. But staff need to understand the protections in place before anything goes wrong. A bit like health insurance – a benefit they will hopefully never need to use.

HR professionals need not worry about becoming pensions gurus – after all, it’s not your responsibility to advise employees on how pensions work. We want to help ensure HR teams are well equipped with information rather than answers, and always recommend referring people to the FCA guidance and the importance of taking professional financial advice.

It might also make sense to engage with your pension’s Chair of Trustees, who can discuss more ways to communicate the PPF’s protections to your people.

DB vs DC challenges

Many companies will have some team members in DB schemes, and others in defined contribution (DC) schemes. Having employees in different schemes can make it challenging to implement a company-wide approach and lead to confusion. One-size-fits-all won’t work.

The most common feedback we hear from scheme members when their employer becomes insolvent is that they didn’t know anything about the protection that exists.”

Helping DB scheme members become aware and appreciative of the enhanced benefits they receive – while not alienating any DC scheme members you employ – can be a delicate balancing act.

It is therefore worthwhile communicating the protections and benefits that DC members receive too, including protection from the Financial Services Compensation Scheme (FSCS).

It’s worth considering communicating pension protections as a benefit that all employees receive as part of your wider financial awareness strategy. The most common feedback we hear from scheme members when their employer becomes insolvent is that they didn’t know anything about the protection that exists and better communication, before crisis occurs, would have given them considerable peace of mind.

Connecting with former employees

Not only are there lots of employees on different schemes within any one company, there are also former employees. The PPF’s protection follows an employee after they leave – as long as they remain a member of the scheme. This poses a further challenge once an employee leaves, as the communications responsibility sits with the pension administrators not the employer, or HR team.

With many people having numerous pensions in a variety of different schemes as they move between roles (often a combination of both DB and DC), these regular communications touchpoints can be lost.

Eventually the government’s pension schemes dashboard project, introduced in the new Pension Schemes Act, will help people keep track but until then there’s perhaps opportunity to add more communication into leaver letters as a result, reminding employees that protection will follow them into their next role.

Where does HR fit in?

I believe our profession needs to make a concerted effort to help simplify how investing in your pension today results in better outcomes for the future.

We need your help in communicating the added, but invisible PPF protections that sponsoring employers offer DB scheme members.

Your help to empower them with the right information to make informed choices with regards to their pensions and financial futures, will serve them well in a worst-case scenario.

Whether that’s through more bespoke communications to different scheme members, improved financial awareness training and/or strategies, or even via leavers letters – there are several ways to potentially combat the challenges that currently exist.

HR and talent teams have a crucial role to play, and when organisations proactively engage with their employees on this issue it can result in a well-informed and happy workforce.

Our website and social media platforms are one place to get information and we’d love to hear what more we can do to help you raise awareness of this important protection that everyone hopes they’ll never need, but your employees will be eternally grateful for if they ever do.

Compensation and benefits opportunities on Personnel Today


Browse more compensation and benefits jobs

Avatar
Katherine Easter

Katherine Easter is chief people officer at the Pension Protection Fund

previous post
Speedy onboarding: Mike Seidle talks to Oven-Ready HR
next post
A day in the life as an OH practitioner: Libby Morley-Hassanali

Leave a Comment Cancel Reply

Save my name, email, and website in this browser for the next time I comment.

You may also like

Gender pensions gap: women’s retirement pot less than...

24 Jun 2022

BBC awards pay increase as pension scheme review...

12 May 2022

Gender pensions gap: half of women expect to...

9 May 2022

Union urges Uber to make pensions Sharia compliant

20 Apr 2022

Pensions: employers consider how to mitigate impact of...

25 Mar 2022

Cost of living crisis: what can businesses do...

7 Mar 2022

Commuters grapple with rail fare hike as Tube...

1 Mar 2022

Universities union votes for 10 days of strike...

28 Jan 2022

Report: Prioritise workers’ pensions, not shareholder returns

10 Jan 2022

Employee Benefits Awards 2022 deadline fast approaching

6 Jan 2022
  • The ultimate guide to payroll for small businesses PROMOTED | You’ve started a business that has expanded to the point of requiring more staff to meet demand. Congratulations!...Read more
  • NSPCC revamps its learning strategy with child wellbeing at its heart PROMOTED | The NSPCC’s mission is to prevent abuse and neglect...Read more
  • Diversity versus inclusion: Why the difference matters PROMOTED | It’s possible for an environment to be diverse, but not inclusive...Read more
  • Five steps for organisations across the globe to become more skills-driven PROMOTED | The shift in the world of work has been felt across the globe...Read more
  • The future of workforce development PROMOTED | Northumbria University and partners share insight...Read more

Personnel Today Jobs
 

Search Jobs

PERSONNEL TODAY

About us
Contact us
Browse all HR topics
Email newsletters
Content feeds
Cookies policy
Privacy policy
Terms and conditions

JOBS

Personnel Today Jobs
Post a job
Why advertise with us?

EVENTS & PRODUCTS

The Personnel Today Awards
The RAD Awards
Employee Benefits
Forum for Expatriate Management
OHW+
Whatmedia

ADVERTISING & PR

Advertising opportunities
Features list 2022

  • Facebook
  • Twitter
  • Instagram
  • Linkedin


© 2011 - 2022 DVV Media International Ltd

Personnel Today
  • Home
    • All PT content
    • Advertise
  • Email sign-up
  • Topics
    • HR Practice
    • Employee relations
    • Equality, diversity and inclusion
    • Learning & training
    • Pay & benefits
    • Wellbeing
    • Recruitment & retention
    • HR strategy
    • HR Tech
    • The HR profession
    • Global
    • All HR topics
  • Legal
    • Case law
    • Commentary
    • Flexible working
    • Legal timetable
    • Maternity & paternity
    • Shared parental leave
    • Redundancy
    • TUPE
    • Disciplinary and grievances
    • Employer’s guides
  • AWARDS
    • Personnel Today Awards
    • The RAD Awards
  • Jobs
    • Find a job
    • Jobs by email
    • Careers advice
    • Post a job
  • XpertHR
    • Learn more
    • Products
    • Pricing
    • Free trial
    • Subscribe
    • XpertHR USA
  • Webinars
  • OHW+