Everything You Need to Know About Pensions and Electoral Reform
By Michael Hoare
Prompted on Pensions
Running anything – let alone a trade association – is never easy, but to do it with your head buried in the sand requires not only a certain level of athletic ability but also a facility for decision making without the benefit of evidence and information. Risky, one might think, but plenty of association CEOs are choosing to adopt this position when it comes to the government’s upcoming changes to pensions. Lulled into a false sense of security by the phasing in of ‘Auto-enrolment’, many employers have assumed that it will be ages before the rules are applied to them; that they are too small to be affected; or the rules will suddenly and magically disappear!
The reality is of course that none of the above is true, and that the changes affect all workers including full-time, part-time, agency, zero-hours, offshore - even possibly contractors on the payroll – aged between twenty-two and the state pension age. In other words, an awful lot of people, as IofAM members who attended the Association’s seminar recently found out. On hand to give them the bad news was Mark Stevens, an employee benefits consultant with Close Brothers, a specialist financial services group with expertise in banking, securities, and asset management.
The changes came about as the result of the realisation that the ratio of working people to pensioners fell from 10:1 in 1901, to 4:1 in 2005, and looks set diminish to 2:1 by 2050, according to estimates from the Department of Work and Pensions. The alarm having been raised, Lord Turner, Chair of the Pensions Commission 2003-2006, set out the new ground rules, which included a fairer and more generous State Pension; low cost pension aimed at low-to-moderate earners; automatic enrolment into workplace pension schemes; and compulsory minimum employer and employee contributions.
All well and good, you might think, but even the Pensions Regulator is quoted as saying ''Employers should be under no illusion: implementing auto enrolment will take time, including assessing the suitability of their existing pensions arrangements or choosing a scheme, and adapting their payroll, HR, pensions and IT systems'' - and that was in December 2011! The fundamental message is that there will be no escape from the 270 pages of legislation, and that all employers will have to comply between now and 2016. And if you think that’s a long way off, think again, as most IofAM members will have to comply within 12-18 months! Not only that, but they will come under increasing pressure from their own members to provide them with advice and guidance as the deadlines draw closer.
Finally, if nothing else convinces you that it’s time to take advice, then a quick look at the penalties for non-compliance will surely do the trick. An infringement at stage two of the process can incur a fixed penalty of £400 – a wake-up call for the unwary – whereas daily penalties escalate from £50 - £10,000 for serious and persistent offenders, dependent on the number of employees. But, if you still want to go it alone, it’s time to get stuck in. The first step is to collect complete and accurate data; assess your workforce; model the financial impact; and then establish a qualifying Workplace Pension Scheme. Then you can move on to assess payroll processes and functionality, review the market, and select an appropriate technology solution(s). After that it’s just a case of communicating compliantly; continually assessing your workers; managing Opt-in/Opt-out; and maintaining you record keeping. Easy!
As a trade association manager, how many times have you been asked your membership’s view on a particular issue, policy, or piece of legislation, only to realise that you are completely in the dark? And, in all honesty, how many times have you responded to such an enquiry – possibly from the press - with your own best guess; hoping that the majority will tow the party line and follow you over the barricades into the thick of battle? We’ve all done it, and because we’re all seasoned campaigners – with our ears to the ground – we generally get away with it. But what if your judgement call goes awry? Second guessing the mood of your constituency is a risky business, and careers can be seriously dented by getting it wrong. Why not limit the risk by asking your members what they really think? The answer to that question is that to do so would be costly, time consuming, and wasteful. But what if it was none of these? Enter the Digital Democracy!
Recently, during a fascinating IofAM instigated discussion, which utilised SMARTvote devices to take quick polls from the floor and encourage discussion around various points in their presentation Luke Ashby and Munni Musa from Electoral Reform Services (ERS) asked delegates to consider if digital technology could be applied to democracy. Along the way they demonstrated that online voting is an effective way to reduce an association’s printing costs, provide wider communication choice for members and be more environmentally friendly.
However, not everybody is comfortable with computers and it is vital in a democracy to ensure that no voter is disenfranchised: the right mix of communication methods need to be employed. Maximising communications and using social media within an election context is a powerful way to raise the profile of an election and foster engaging discussion with the electorate. Digital democracy is about much more than just social media, however. For example, the effective capture and use of data allows for targeted communications and buy in to cost saving online elections.
The discussion also focussed on other barriers to voting online. These include lack of trust in the security of the process; technophobia; and voter fatigue or cynicism. However, as more commercial transactions take place digitally, and security improves, electorates are becoming increasingly comfortable with online voting.
Electoral Reform Services are the UK's leading independent supplier of ballot and election services, whose expertise is recognised worldwide as independent scrutineers of voting as authorised by Parliament. Working for not-for-profit organisations and government bodies, typical assignments include leadership or board elections, proxy voting, independent scrutiny of AGMs, membership votes, employee representative elections, housing ballots, referendums, and elections of pension scheme trustees, board of governor elections, community consultations and independent audience vote verification.