Employer pension contributions remain buoyant

The CIPD's annual reward survey shows that 95% of employers are still contributing to organisation pension schemes for existing employees. The survey of 500 employers shows that contrary to popular opinion, more organisations plan to increase their contributions than close them in 2003. Nor are employers closing their schemes to new employees, with 87% of organisations contributing to the pension schemes of new employees. These findings will be launched at the CIPD's Annual Reward Conference on 4 February 2003
The report also shows that many organisations are failing to grasp many of the key issues in HR.

One anomaly is that while the vast majority of organisations report recruitment and retention difficulties, they are failing to involve the staff member (12%) or their line manager (35%) in determining their reward strategies. As Duncan Brown, CIPD Assistant Director-General comments, The effectiveness of reward strategies in the UK is questionable when organisations are failing to consult with the very staff they wish to recruit and retain. Employee involvement and communication are inextricably linked to trust which is critical to the delivery of reward strategies in practice.

The CIPD is also disappointed that only one fifth of organisations have carried out an equal pay audit. Brown comments, This is alarming given that the Government opted not to force private sector organisations to carry out equal pay audits; especially when such an overwhelming majority (89%) favour a voluntary approach.

Private sector organisations are effectively on trial and if the situation continues, they will face the requirement that is currently before public sector organisations, which will lead to much more unwanted red tape. Not forgetting that the number of tribunals involving equal pay claims has almost doubled in the past two years.

Other key survey findings include:

* Of the 101 employers that intend to change their pension arrangements in 2003 (20% of the sample), more employers intend to increase their own contributions to their employee pension schemes than those who plan to close them.
* The most common objectives of organisation reward strategies are to recruit and retain high performers (76%), and to support the achievement of corporate goals (83%). Predictably, managing pay costs rose to become the third biggest priority.
* The performance/profitability of the organisation (78%) is the biggest influence on reward budgets followed by market-rate pressures (56%). The latter figures reinforces the recruitment challenge faced by many UK organisations in spite of the economic slowdown.
* 131 organisations are introducing new benefits packages in 2003. Just over two fifths of this latter sample will introduce a flexible benefits scheme while around one fifth of the sample plan to introduce childcare vouchers.
* Many organisations now treat their staff differently when it comes to pension arrangements. Employers are more likely to offer defined benefit pension schemes to existing staff and a defined contribution scheme to new workers. The trend of closing DB schemes is going to continue in 2003 - between three and four in 10 employers plan to close their existing DB arrangements to new employees.
* The public sector is less likely to have a reward strategy (46%) than private sector organisations (71%).
1 Employment Tribunal Service, Annual Report 2001 - 2002, p. 25