Match the PQM standard instead of levelling down workplace pensions in 2012, says NAPF
On the day that the Pension Quality Mark (PQM) celebrates its first anniversary, the National Association of Pension Funds (NAPF) is urging employers to maintain the standards of their defined contribution (DC) pensions and to benchmark them against the PQM.
The UK’s largest pensions body said the 2012 pensions auto-enrolment reforms are a major step forward that will help encourage workers to save for retirement, but it warned that employers may ‘level down’ their workplace pension provision.
Joanne Segars, Chief Executive of the NAPF, said:
“The auto-enrolment reforms due in 2012 are good news as they will nudge many workers into saving for their retirement.
“However, it is vital that employers continue to play their part in helping address the pensions saving crisis that the UK is facing, and that they don’t fall into the temptation of ‘levelling down’ their pension to match the statutory minimum requirements of the new law.
“Our PQM initiative encourages us to believe that employers understand the key role they can play in helping workers save for their retirement, and it could help guard against levelling down.
“We hope that more will follow by applying for the pensions industry’s mark of excellence to make their commitment to the pensions saving crisis crystal clear.”
The NAPF, which launched the PQM standard in September 2009, is holding an event at its offices to celebrate the first anniversary of the PQM.
The event also features a supporting address from the Secretary of State for Work and Pensions, Iain Duncan Smith, who said:
"Our workplace pension reforms announced this week will mean millions more people saving for the first time or saving more.
"From 2012 every employer will have to enrol their employees into an eligible pension scheme, helping to bring back a savings culture to Britain.
“This initiative heralds a real tipping point for pension provision. We hope that it will act as a stepping stone for employers to go further and faster in providing quality pensions. That’s why it’s important that we celebrate initiatives like the NAPF’s PQM which recognise such quality schemes and help to restore confidence in pension provision.”
The PQM is the pensions industry’s mark of excellence and recognises employers who provide high-quality defined-contribution (DC) pension schemes to their staff. The standard recognises schemes whose contributions are of at least 10 per cent and with a minimum employer contribution of 6 per cent. However, the 2012 rules require only a 3 per cent employer contribution.
The case for a high-quality workplace pension and for PQM is backed by research published by the NAPF today. The research shows that 79 per cent of workers are more likely to apply for a job if the prospective employer offers a high quality pension. And 57 percent of employees view a potential employer more favourably if its pension scheme has an independent quality mark.
80 schemes have been awarded the PQM standard since its launch, covering over 155,000 workers. Among the latest joiners are Capital One, Centrica and Roche. Other organisations to hold the PQM include Marks & Spencer, Michelin, Accenture and Volkswagen.