Benefits briefing: July 2017

Highs and lows for pensions – and salaries at the BBC. We round up the month’s top HR stories 

Benefits briefing: July 2017
Auto-enrolments will soon face their biggest test yet, but research shows they perform better than buy-to-let investments. Image: iStock

3rd July

One million auto-enrolment opt-outs by 2019?

In what’s likely to be a bitter blow to auto-enrolment, research by Hargreaves Lansdown is predicting an exodus of opt-outs as the initiative prepares to face its most testing period yet – gradual rises in the amount employees will have to contribute up to 2019. According to the report, an employee on an average wage will have to step their contributions up from the current £18 a month to £92 a month. And it predicts this will cause opt-outs to soar from 10% today to 21.7% in 2018 and 27.5% by 2019. Senior pension analyst Nathan Long said: “The shape of the future long-term savings policy hinges on the behaviour of workers during 2018 and 2019.

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4th July

Sandwich generation sacrifices pension saving to help children

The so-called ‘sandwich generation’ – those looking after elderly parents and young children – risk their own futures because they’re using any spare cash they have to get their children on the property ladder rather than ploughing it into their own pension provision. This is the conclusion of research by Wealth Wizards, which found 66% of respondents said they’d rather help their children out than save for themselves. In addition to this, just under half (46%) don’t think they’ll be able to save enough money for a pension until their children have left home, while a third (32%) said they will be unable to save for a pension until their parents pass away.

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5th July

Working parents spend £1,800 on ‘unnecessary’ childcare

Employees with children are needlessly forking out up to £1,800 per year on holiday clubs, nannies or after-school care – because their employers are not being upfront about their legal right to request unpaid parental leave, says research by Crossland Employment Solicitors. Legislation provides that all staff have the right to take up to four weeks’ unpaid leave in blocks of a week, up to a maximum of 18 weeks per child, up to the age of 18. Yet, it finds three-quarters have never used the provision because their employer didn't advertise the fact it existed. Of those who had used it, half of men and a third of women questioned said they were concerned about its impact on their career. Meanwhile, 39% feared taking additional time off would be perceived negatively by their employer/colleagues.

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11th July

Taylor Report: all employment must be fair

The long awaited Taylor Report into the ‘gig’ economy has concluded that employment must be ‘fair and decent’, and recommends that workers for firms such as Uber and Deliveroo should be classified as dependent contractors, and be given extra benefits. Although Taylor supported the gig economy, saying it provides flexible working for more than one million people, he said too many employers were relying on zero hours, short-hours or agency contracts, when they could be more forward thinking and formally employ people. Speaking to the BBC he said: "There are too many people at work who are treated like cogs in a machine rather than human beings. There are too many people who don't see a route from their current job to progress, earn more and do better."

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12th July

Supreme Court allows appeal on gay man’s pension

The Supreme Court has ruled that a same-sex partner should get the same pension benefits as a wife or heterosexual partner would if he dies. The case was raised after John Walker’s former employer, Innospec, told him that his civil partner would not be paid a spouse’s pension in the event of his death. Innospec refused on the basis Walker’s end of service pre-dated 5th December 2005, when civil partnerships were introduced in the UK. In October 2015, the Court of Appeal dismissed Walker’s case, meaning pension schemes would not be obliged to provide benefits to civil partners of scheme members in respect of service before 5 December 2005. But a panel of judges at the Supreme Court has said that Walker can appeal this decision.

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17th July

A third of employees are living month to month

A shocking 37% of employees would immediately be unable to pay their everyday bills if they were suddenly taken ill. Health insurance agency BHSF’s report ‘A high wire, but no safety net’ also discovered that more than a quarter (28%) of the 1,000 staff surveyed would turn to credit cards, while one in 10 (10%) would need to ask their family for financial help. To make matters worse, it found that the age group most in need would be the 30-44 age group – the generation most likely to have children or other dependents.

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18th July

Are benefits packages doing their job?

Income protection provider, Unum, has found a staggering 50% of staff don’t think their employee benefits package is tailored to their needs. Its ‘Workplace Communication Blueprint’ report also found 29% of more than 1,100 staff polled, didn’t think their employer understood what was important to them, while 18% were dissatisfied with their current benefits package. However, the report also drew attention to the fact only 58% of staff were aware of all the benefits that are available to them, and 37% didn’t know if their employer offered an employee assistance programme. More than a quarter (26%) didn’t know they could access childcare vouchers, while 17% didn’t know they could make pension contributions above the statutory minimum.

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19th July

BBC’s pay details reflame gender gap fires

It wasn’t so much the scale of pay that seemed to provoke the greatest ire when the BBC's pay report was published - rather the fact that it seems so stringently divided along gender lines. While Newsnight presenter, Emily Maitlis, didn't appear on the list (which only details those earning more than £150,000), her co-presenter Evan Davis earned at least £250,000. In the wake of the news, the BBC’s director general, Tony Hall, promised to close the gender pay gap by 2020.

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20th July

Pension beat buy-to-lets

Better news for the pensions sector: the returns that can be made from investing in a pension could be twice that of investing in a buy-to-let property. Research shows a £200,000 property giving a 3.75% rental yield, and 4.5% capital growth would return 237% over 20 years after capital gains tax has been paid. However, a 40% taxpayer, maxing out their pensions contributions, could pocket returns as much as 435% post-tax, assuming annual growth of 6% net of fees over the same time period.

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20th July

Pension age moved seven years early

In a move that took most of the industry by surprise, the government has confirmed it wants to raise the pension age from 67 to 68 between 2037 and 2039, seven years earlier than previously planned. The move will impact anyone currently under the age of 45. The move sees the government accept the recommendations of John Cridland, the former director general of the CBI, and it means the taxpayer will be saved £74 billion in NI contributions by 2045-46. Around six million people will now have to wait a year longer for their state pension, although the plans could still change again.

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AND FINALLY…

Goldman Sachs chills out

It may have taken a mini heat wave to finally change the habit of a lifetime, but Goldman Sachs – the City’s most buttoned up firm, has finally relaxed its dress code. After 148 years of seeing their staff get hot under the collar, an email was sent to its technology staff saying they can finally dress casually all year round. Approximately 30% of the bank’s 33,000 employees are back-office engineers, and it’s thought the old rules were putting off young talent. The move comes after – shock horror – MPs in Parliament were also given permission stop wearing ties if they prefer. Soon politicians will be wearing football shirts to work (Stop press - it’s already happened! Hannah Bardell, SNP member for Livingston, was spotted wearing a Scotland football jersey underneath her jacket…).

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Saturday 19 August 2017
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