Employee Benefits, Nov 2002 pS 13 (2) Case studies: fleet street has given pensions boardroom notoriety, now could be your chance to help steer bosses towards total reward. (Industry Overview) Sarah Ball. Full Text: COPYRIGHT 2002 Centaur Publishing Ltd. The national headlines say that pensions are in crisis, but in every crisis lies an opportunity. And benefits managers are in the perfect position to rethink pensions in the context of total reward, and to see what opportunities there are for the benefits they invest in. At the October launch of the National Association of Pension Funds’ (N APF) report Pensions — Plain and Simple, chairman Peter Thompson said: “Employers should make an informed choice over changes to pension provision.” He appeals to employers set on closing their final salary defined benefit schemes (DB) to consider alternative design options to defined contribution (DC) plans, such as DB/DC hybrid schemes and DB schemes based on career average revalued earnings (Care).
Over the past year, Employee Benefits has reported on these designs and on the sprinkling of organisations that have already pursued some of these options, including Nationwide Building Society, The Pensions Trust, Safeway and Tesco. A benefits manager’s role stretches beyond the mechanics of pension scheme design to the so-called softer elements of the total reward offering, such as communication, consultation and flexibility. These can be as important as hard remuneration in employees’ perceptions of their employment deal. The fallout from the last two years of DB pension scheme closures demonstrates that the organisations which carefully considered this side of the equation have emerged less battle scarred than those that haven’t. employee consultation Companies that have attempted to move existing employees (rather than just new staff) into DC schemes perhaps underestimated the controversy their actions would cause. At Ernst & Young and the Big Food Group (formerly Iceland), this resulted in legal action, and at steel company Caparo, a strike.
The Essay on A New Employee Reward and Recognition Program
In efforts to increase motivation, increase employee job satisfaction, increase communications, and raise the employee retention rate, a rewards and recognition program could be implemented. Being a non-profit organization with no budgetary spending allotted for a rewards and recognition program, makes this project challenging. However, the benefits appear to tremendously outweigh the burdens. ...
Ken Penton, a spokesman for the Iron and Steel Trades Confederation (ISTC) which represented Caparo workers says: “[Caparo’s] reluctance to discuss the situation left us with no alternative.” Caparo ended up re-establishing the DB scheme on a modified basis, with concessions from both sides. A lesson, indeed, on how employee consultation prior to launch can avoid bruising public battles which damage the employment brand. But even when a company closes its scheme to new members rather than existing ones, broader employee relations issues can trump the agenda. Prudential is a case in point. At the time of going to press, publicity over its proposed pension provision changes had turned sour, after an initially positive airing. This had little to do with the actual quality of the proposed new DC scheme for new joiners.
The government actuary’s figures for 2000 show UK employer contributions for DC schemes at 5. 1% of earnings, while in DB schemes they average 11. 1%. On their own merit, Prudential’s 6%-12% contributions (dependant on employee matching) are actually at the better end of the benchmark.
Furthermore, the company had rolled out an extra day’s leave for financial planning, which was publicly applauded by the financial secretary to the Treasury, Ruth Kelly. Union consultation However, just as everything was looking OK on the pensions front, an unexpected (and unrelated) announcement was made — 850 jobs in Prudential’s Reading call centre could go because the work was being transferred to India. Suddenly the pension scheme changes got rolled into a broader employee relations battle, and was reported as such by the national media. Brian Harris, a spokesperson for Amicus, the union involved says: “There is a breakdown in trust. Employees fear this is the thin end of the wedge and believe the DB pension scheme could be closed to existing members in the future, not just new staff. They are saying, ‘this new financial planning day is a great opportunity to look for another job’.” Steve Colton, head of media relations at Prudential replies: “That is complete [rubbish].
The Business plan on Should You Offer Employees Health Care Benefits?
Health care benefits are optional for most employers, but of critical importance to most employees. Employers should be aware of the pros and cons of offering health benefits to their employees. Benefits are a critical piece of an employee compensation package, and health care benefits are the crown jewel. Health care benefits, along with time-off benefits, are the most popular of benefits to ...
We sent a letter to existing scheme members stating that we have no intention of withdrawing their benefits. The call centre issue is a completely separate matter and we fully accept that consultation with the union is appropriate.” Whatever the truth about employees’ perceptions of their employment deal, there is a clear lesson benefits managers will recognise: timing is everything when it comes to sensitive employee relations issues. Satisfaction surveys One organisation which avoided public employee relations strife when it closed its final salary DB scheme to new members, is Nationwide. Michael Fair lamb, head of pensions, puts this down partly to choosing a Care scheme, rather than a DC one: “Unions are not so violently opposed to Care as they seem to be about money purchase [DC]. They are not ecstatic mind you, but I get the impression that they are less willing to oppose Care.” Arguably though, Nationwide’s careful attention to the total reward package it offers staff, has been an important backdrop to the acceptance of pension scheme changes. At Nationwide, 75% of staff are female and the organisation actively encourages flexible working arrangements and working past the normal retirement age.
It regularly conducts staff satisfaction surveys. These initiatives encourage employee buy-in and have the business benefit of lowering staff turnover and thus costs. Nationwide introduced its Care scheme in January 2002, but rather than sitting on its laurels, has seized every opportunity since to reinforce the retirement saving message through the total reward package. For instance, it sent out benefit statements incorporating personalised data on state pensions from the Department of Work and Pensions in July. Evan David ge, a reward consultant says: “We timed it so that employees could put their money from the annual corporate bonus towards their retirement savings, if they wanted to.” Furthermore, Nationwide wrapped the scheme into its flexible benefits package so that staff could avoid the commission they would have had to pay on an a free standing added voluntary contribution (FS AVC) or ISA. A Care member’s pension builds up each scheme year, adding 1/54 th of pensionable salary received during that period, revalued in line with inflation.
The Term Paper on Relationship Between Employees and Health Care Organizations
Analyze the factors affecting the relationship between employees and health care organizations to determine which single factor is the most significant. Explain your reasoning. The long-term economic success of healthcare organizations depends on the efforts of employees with the appropriate capabilities and motivation to perform their jobs well. Organizations that are successful over time have ...
Employees can now flex this up to 1/36 th. Contribution sabbaticals Another organisation that has recently redesigned its pension provision in the context of refashioning its total reward offering is Hewitt Bacon & Woodrow. Following the merger of Hewitt with Bacon & Woodrow last year, the new organisation launched a flexible benefits package in October 2002. Its 15, 000 employees can choose on an annual basis, whether to contribute to a Care scheme, or to a DC one.
Interestingly, the legacy arrangements were both DC, not DB, so the Care scheme is actually the new kid on the block in this arrangement. Given that Hewitt Bacon & Woodrow is an actuarial and human resources consultancy, one assumes that employees have the financial literacy to cope with weighing up their options year-on-year. Kevin Wesbroom, principal design consultant, says: “Given that our proposition to clients is that the ‘one size fits all’ benefits package is dead in the water, we feel that the total reward deal we offer to our own employees is consistent with that.” One area of internal debate was over whether the consultancy should allow employees to take contribution sabbaticals, given that encouraging retirement saving is another key message of its external brand. It decided flexibility for the individual employee was still important, and settled on allowing contribution sabbaticals of up to three years. Wesbroom says: “22-year-old trainees, realistically, might not place pension saving that high on their agenda. They may have other financial planning priorities.
The Term Paper on Retirement Planning Defined Benefit Vs Defined Contribution
Retirement Planning: Defined Benefit vs. Defined Contribution Defined Contribution and Defined Benefit plans are the two major types of retirement pensions, which are sponsored by the United States employers. When the employee faces the need to make a choice, it becomes crucial to understand the differences between Defined Benefit and Defined Contribution plans, as both of them have their ...
Dare I say it, they may even prefer to have a bit more of life at that age, particularly if they reckon their earnings will be much higher when they qualify.” When a dyed-in-the-wool actuary starts talking in terms of total reward, you realise how times change. Article A 95527151.
