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Will employers claw back increased cost of pensions?

The CIPD have today issued a press release (reproduced below) highlighting the impact of increasing enrolment in workplace pensions for employers.  In particular, when combined with the forthcoming changes to UK minimum wage (the so-called living wage) this raises concerns that employers will look for other ways to reduce their wage costs.  While the CIPD (see blow) focus explicitly on the pension implications, there are also potential impacts on employees psychological contracts.  That is to say, the understanding between employees and employers of their respective sides of the bargain.  While employees may see pensions as a long term issue, increase costs for employers may result in them expecting increased effort and productivity right now.  This could result in tensions at work for employees of all ages.

CIPD press release issued today:

More UK employees in a workplace pension but employers are feeling the pinch

Two-thirds of UK workers are now saving through a workplace pension scheme, thanks to automatic pension enrolment, but seven in ten employers are feeling the impact in cost terms. While the focus must remain on encouraging employees to save into a workplace pension, the pressure is on for employers to improve productivity before other elements of the reward package and profits suffer, particularly as the introduction of the National Living Wage approaches.
This is according to the latest Employee Outlook: Focus on employee attitudes to pay and pensions from the CIPD, the professional body for HR and people development. The survey of over 2,000 working adults finds that two-thirds (66%) of employees are now saving through a workplace pension scheme, up from the 45% recorded in 2010. This figure increases to 74% if those earning less than £10,000, who are not eligible for automatic enrolment, are excluded.
However, 70% of employers who have gone through automatic enrolment noted the financial cost on their organisation. The most common reactions to these costs include taking lower profits/absorbing costs (21%), paying the statutory minimum pension contributions for automatically enrolled staff (15%), reducing or stopping wage growth (10%) and reducing other elements of pay (10%).
Charles Cotton, CIPD Performance and Reward Adviser, comments: “Many pension commentators have suggested that workers and firms aren’t paying in enough to their workplace defined contribution schemes, but this research encouragingly shows that most employers and employees are contributing well in excess of the minimum rates required under automatic enrolment. However, employers are clearly taking a hit and this is likely to become more of a problem as the introduction of the National Living Wage in April and the Apprenticeship Levy in 2017 edge ever closer.
“What is particularly worrying are possible changes to how pension contributions will be taxed in future. Taxing pension contributions or introducing a single rate of tax relief would result in a significant administration and cost headache for many employers. If changes have to be made then they should come in after 2018 as auto-enrolment will be complete and organisations will have had time to measure and respond to the impact of these other new initiatives. Employers need to be protected too, so for the moment it’s better to stabilise, rather than rush through changes that will put unnecessary strain on many organisations.”
One way of being able to increase pension contributions without cutting back on other parts of the payroll is if employers are able to improve their productivity. Indeed, among the 32% of employers that increased salaries by more than 2% in 2015, 28% were able to do so through productivity improvements. However, so far, just one in eight employers (12%) have actually taken steps to review working practices and job design in order to increase performance, and this figure is much less (8%) for small businesses.
Cotton continues: “While many ways of boosting performance may now only be marginal, especially in sectors subject to legal requirements, if employers can make enough small changes then they can really boost their productivity. What all employers need to do is review the way their organisation operates and identify the areas where improvements can be made, before deciding the task is too great.”

UK Government launches ‘intergenerational fairness’ inquiry

The UK Government’s ‘Work and Pension’ Committee has launched an inquiry on intergenerational fairness, and is inviting written submissions by 19th February.

Details about the inquiry are rather vague and particularly lacking is any discussion of how generations are being defined and which generations might be of concern.  The scope states:

“The inquiry aims to answer the question of whether the current generation of people in or approaching retirement will over the course of their lifetimes have enjoyed and accumulated much more housing and financial wealth, public service usage, and welfare and pension entitlements than more recent generations can hope to receive”.

The full terms of reference are however more specific about the age groups – or is that generations – that are of interest:

“The group born in the middle of the baby boom (between 1956 and 1961) have been forecast to receive from the welfare state 118 per cent of what they contribute; while recent research shows that younger people are on course to have less wealth at each point in their lives than earlier generations had acquired by the same age”.

This seems to suggest a comparison between a very narrow age range (those born over a five year period from 1956-1961) and a rather broader group simply termed ‘younger people’.  Is it just me that finds this rather frustrating!  Looking at the submissions so far, terms such as ‘our generation’, are unhelpfully being used to highlight particular issues.

As we have pointed out all too frequently on this blog and elsewhere, age is only one factor here and social economic status is at risk of being completely ignored in this sort of review.

Age charities for under-fire

It has not been a good time for the charity sector in the UK recently – particularly it seems if you are a charity involved in helping out at either end of the age spectrum.  Both Kids Company and Age UK have, for very different reasons, been under scrutiny for their financial activities.

Kids Company was the subject of a lot of media coverage in the last few months and the subject of a recent BBC documentary which followed the last weeks and days of the charity’s operations.  There have been many reactions to this programme in the press, and I found it both interesting and disturbing in equal measure.  While the passion for the cause did not seem to fade among many staff and volunteers, there were some difficult questions to ask about the potential creation and continuation of dependency through the actions of handing out cash.  In some cases that this seemed to go on for years and well beyond childhood made me feel uneasy, though of course I recognize that we have only seen a very edited account.  Certainly those involved in Kids Company have strongly defended the charity and its aims in the media.

At the other end of the age scale are the recent commentaries on Age UK and their commercial activities, as reviewed here in the Guardian.  This issue also brings to the fore the extent to which actions by the charity were in the best interests of those who they are seeking to support.  It should be highlighted that Age UK have strongly denied any wrongdoing and provided a response on their webpages.

“We’ll pay you not to work”: Telefónica targets its staff aged over 53

I had to read the heading twice when a colleague sent me this link to the CIPD website.

The item describes a new policy introduced by the Spanish broadband and telecommunications provider in which it is offering staff aged over 53 years who have been with the organisation for more than 15 years, the chance to stay at home, and not work; they would receive 68% of their salary. Staff who take up the offer are free to return to full-time work at any time.

Why? Well it seems to be part of a broader set of pay and working conditions negotiated with the unions in July last year with a view to reducing the organization’s overall wage bill. Telefónica apparently expects the scheme will generate €370m (£280m) in savings.

The same story was covered here in The Guardian. Staff who opt to take up this offer will remain under contract and Telefónica will continue to pay their social security and private health contributions until they reach the age of 65. This has the effect of saving the Spanish state the cost of further unemployment benefits which presumably would have been payable if the staff had been made redundant. I imagine that the 15 year qualification period might rule out quite a percentage of staff but it’s an intriguing ‘solution’, one that potentially removes staff with the most experience. But then Spain has a high youth unemployment rate so there may be political pressures.

I’m sure many of us have days when such an offer would look very tempting! On the other hand, I don’t think I can see this happening in the UK.  As is pointed out in the CIPD article, the GMB union in the UK worked with construction manufacturer JCB to save more than 100 jobs, after a collapse in global sales. Over 2,000 employees of the UK organisation voted to reduce their weekly hours from 39 to 34, in order to decrease the number of compulsory redundancies. I don’t think the hours reduction was related to their age.

A Senior Division? What to do in the second half of a sports career

To tell someone they’re not allowed to do their sport…to show what they’ve been doing in the gym… that would drive you mad‘.

Previously on this blog we’ve highlighted the question of what happens to people who have built a career on a particular sport once they can no longer compete at peak levels of performance. Similar issues arise in ballet and other dance.  Sports commentary, fitness training, managing teams, and teaching others are all possible second careers but they’re not for everyone.

The question came up again recently with the announcement by Frank Bruno (as reported here in the Daily Mail) that he was seeking a return to the boxing ring, at the age of 54. The same article also included a statement by ‘experts’ warning that he should ‘absolutely not’ consider returning to boxing.

The issue was put to David Haye, a heavyweight boxer in the midst of a come-back from injury, in an interview on Radio 4’s Today programme this morning (link here to the episode, interview starts at 2:30). He admitted to ‘mixed feelings‘ about the news that the British Boxing Board of Control had said that it would not grant a licence to Frank Bruno, with Haye clearly holding Bruno in genuine affection and regard. His suggested solution was the introduction of a senior division in boxing, echoing what happens in tennis and rugby. This he argued would allow Bruno – who he described as being in ‘fantastic condition‘ – a licence ‘as long as he fights someone his own age‘. Otherwise, he expressed the frustration – captured in the opening quote of this post – of not being able to do the one thing that you have trained to do since your teens.

Increases to women’s state #pension age – Parliamentary debate 4.30pm today

This afternoon at 4.30pm Parliament will debate the changes in state pension age that currently affect women in the UK.  The debate will be led by Helen Jones, MP, the chair of the petitions committee. It has come about as a result of a petition which gathered the required 100,000 signatures needed to compel parliament to examine the matter. As explained in this article in The Guardian last month, the petition also calls for “fair transitional arrangements” for a particular cohort of women – the several hundred thousand women born in the 1950s – who it is said have had their retirement plans “shattered” by state pension age increases.

This item on the BBC News website includes a short film featuring a number of women adversely affected by the decision to raise the age at which women will now be eligible to receive their state pension. Last Saturday’s Independent reported how many women born in the 1950s say they weren’t given enough notice about the increase in state pension age, part of a wider range of reforms to equalise pension and retirement between men and women and also to promote longer working lives.  These changes were enacted in the Pension Acts of 1995 and 2011. Many argue that they received no notification of these changes (particularly since the timetable for their introduction has been speeded up). Consequently, they say ‘they have been unable to prepare for the extra years they need to work, leaving them facing financial worries at a time when they expected to be able to start enjoying their golden years‘.

This has led to the formation of an action group, Women Against State Pension Inequality or WASPI (link here to their Facebook page). The group campaigns ‘against the unfair changes to the State Pension Age imposed on women born on or after 6th April 1951 (and how the changes were implemented)‘.  I notice that some of the recent posts are critical of Roz Altmann’s contribution on this morning’s BBC Radio 4 Today programme: listen again via this link (the item and interview aired at about 8.40 am).

If you want to watch the debate live, this is the link to the Parliament Live TV coverage.

@CIPD provide useful breakdown of recent age discrimination case

The way in which age discrimination can occur in an organization is complex, particularly when the situation involves redundancy programmes which are themselves difficult to unpick, even from an HR expert perspective.

This summary by the CIPD provides a step-by-step breakdown of a recent case which highlights some of the potential pitfalls for HR departments.  It also useful offers insights into the need for those going through these processes to be clear about their rights and the implications of their particular set of circumstances.  It is hopeful that as HR specialists become more used to considering the potential for age discrimination such cases will become rare, but for now it certainly seems that employees need to remain vigilant.

Ageing the bigger picture competition produces stunning results

We highlighted this competition on our blog last November and now the results are in.  Take a look at public winners and those nominated from their expert panel posted on their Photocrowd site.

Do also read the expert reviews for behind the scenes info on the photos and their subjects.  Inspirational stuff.

Football: how young is too young for a professional transfer?

This article in The Conversation by Eleanor Drywood explores the issue of young players who are the subject of international football transfers by Europe’s top clubs.  And they are complaining you ask?  Yes, and it seems there is good reason to be concerned.  FIFA has rules regulating the transfer of players under-18 yet it appears these are often ignored and many managers in the game seem to think they are unnecessary.

The top clubs undoubtedly can provide unrivaled opportunities for young players and many have excellent academy set ups however the issues are somewhat different for those who do not progress in their career at this stellar level.  Moreover the article reports worrying details of “trafficking” networks in which young boys (so far, only boys it seems though at the women’s game becomes more lucrative that might yet change) are sought from poor areas and promised a dream of footballing glory.  15,000 such young players are estimated to be in Europe.

The article does not suggest an outright ban will be effective and the author points out that for some, the dream will be realized, but more support and regulation for those who do not make it is strongly urged.


Talent never gets old (part 2): Bowie and Rickman

I’m returning to the observation reported in Wednesday’s blogpost that ‘talent never gets old’. Though this was made in the context of older women on TV, it seemed equally pertinent to two men whose recent deaths (both at the age of 69) have generated a great deal of media coverage. I’m talking here about David Bowie and Alan Rickman.

What I think is interesting about the coverage and reflections following their untimely deaths (I was rather sideswiped by both) was that in no way was it said that they were at the end of their careers. Most of us only know these men through their work of course so that tends to be how we relate to them. But Blackstar, released on Bowie’s 69th birthday and reviewed here in The Telegraph is described there it as ‘shot through with a late-life melancholy‘, with the reviewer talking about Bowie’s previous album as a ‘clearing of the decks‘ to make room for Blackstar and wondering whether the latter represents ‘an entirely new phase in Bowie’s extraordinary career‘. Of course, now we can make sense of the album’s valedictory quality. But nevertheless it’s notable how this review and many of the comments on social media reflected the view that his death was denying us more of his work; that there was more to come.

That was equally the case with Alan Rickman. I was lucky enough to see him on stage including as the Vicomte de Valmont in the RSC production of Les Liaisons Dangereuses; more recently of course in many TV and film roles. A brilliant actor. Again reading the tributes and comments, there is a sense that many of us didn’t think that Rickman’s career was in any way over or finished. There were more roles to be played. In the context of age and work, our reaction to these deaths at the age of 69 (i.e. over the state pension age) is that we see working lives (not just actual lives) cut short. And of course that their talent didn’t get old either.


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