Momentum building on charity pension issues

David Davison

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The problems 3rd Sector employers are facing with their defined benefit pension schemes it would seem are at last getting the attention they deserve and momentum for change is building.

In December 2011 we saw the publication of the DWP’s consultation on the Section 75 legislation which recognised the problems faced, the ineffectiveness of existing legislation and the need for further consultation.

In February we saw the issue highlighted by Lord Flight in the House of Lords, although unfortunately rejected on behalf of the Government by Baroness Rawlings, off the back of the unfortunate circumstances facing the Wedgwood Museum.

Latest to join the fray is the Charity Finance Directors Group who have issued an open letter to Pensions Minister Steve Webb encouraging him to commit to a fundamental review of the pension issues faced by third sector organisations.This is a timely and welcome intervention which helpfully sets out the extent of the issues.

The problem is that to a great extent the Wedgwood case has muddied the waters as it has highlighted only one of issues – namely last man standing, and the Government response unfortunately reflects this. However, there are a number of issues at play for charities and their pension provision – the inequity and inflexibility of section 75, restructuring complexities, the differences between connected and unconnected employers, the likely worsening of the position as a result of auto-enrolment, ensuring adequate member protection, to name but a few. To just exempt charities from the rules is unfortunately not the answer.

Hopefully the Government will stop dragging it’s heels and get on with the promised consultation as only then can all the issues be identified, their impact assessed and alternative proposals identified. This is a highly pressing issue for the third sector and it needs to be addressed now and hopefully the increased profile will help to achieve this.

David Davison

Post by David Davison

Specialist consultant on pensions strategy for corporate, public sector and not for profit employers

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