Employees
April 01 2002
by Briefing StaffThe newspapers have been full these last few months of the 'pensions crisis'. We first raised pensions here as a CSR issue last summer and suggested companies had three immediate duties: to inform employees about their personal situations, only to decide on 'fair' remuneration levels in the round by including retirement prospects and to account fully on this issue in their social reports. There's little evidence this is yet happening; ignorance and confusion continue to reign. Of course the UK 'pensions crisis' goes deeper than any one company - increased life expectancy; shorter earning periods, with fewer 55 plus year olds staying in work; reduced state contributions (the lowest in Europe as a proportion of GDP and the only one falling); removal of tax credits on funds' dividend income, to mention only a few contributory factors.
However the rush of companies to exit from final salary schemes has become Gadarene. The TUC estimates there are at least two million fewer members of occupational schemes today than a decade ago. It's clear those worst affected are the middle aged, middle managers on whom senior management relies to achieve increasingly demanding corporate goals. At this point, the socially responsible company should pause for thought about the long term consequences of scrapping defined benefit schemes, especially for this crucial group. The costs in staff performance, retention and recruitment, not to mention reputation, may well exceed the apparent savings.