According to CFG and LCP, more than half of charities could save on NI contributions by implementing or expanding salary sacrifice. Simon Jackson from LCP shares the main findings of the first Defined Contributions pension scheme survey.
LCP recently ran the CFG’s inaugural survey on Defined Contribution (DC) pension schemes and contribution structures within the charity sector.
I am delighted that we received responses from more than 100 charities, providing detailed insight into the pensions that charities are providing.
The survey considered pensions scheme design, contribution levels and member engagement across the sector.
The key findings were:
- The majority of charities now offer a DC pension to new joiners, in line with the trend away from Defined Benefit (DB) across the UK. There is a wide variety of pension providers used across the sector, and we have helped some organisations review their DC pension provider, particularly in recent years. There are also minimum size requirements for many providers which come into force in 2030 – will your existing provider meet these requirements and continue to operate?
- Many charities enrol new joiners at the auto-enrolment minimum rates but there is a wide range of options and where employers move away from the minimum contribution rates, and the maximum rates employers will pay vary widely.
- We compared contribution structures to one external benchmark – the Living Pension requirements, a set of standards prepared by the Living Wage Foundation which is intended to offer an adequate level of retirement income.
- Whilst many charities will provide access to contributions at or above the Living Pension required level, not all do, and just over 10% of charities currently enrol at this level (which is a condition of obtaining the Living Pension accreditation).
- Salary sacrifice is not consistently used across the sector. This is an opportunity to pay contributions in a more efficient way and could free up some cash to improve your benefit structure and improve your member’s pension outcomes. The rules for this are expected to change from 2029, but savings can still be made.
- Just under 60% of respondents felt that most or all their employees highly value their pension scheme, leaving over 40% of you who feel that’s the not the case. Pensions are a significant spend for organisations, and if they are not valued by your staff, are you getting the best 'bang for your buck'? Could sector-wide engagement programmes help with this?
Read more about the key findings of the survey.
Please contact Simon Jackson, or your usual LCP adviser, if you would like to discuss how to obtain the best value for money from your Defined Contribution pension arrangement.