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Tackling the looming pensions crisis

Charity Commission Chair William Shawcross recently said that the “deadliest threat” to the sector comes from Islamic extremism. I, however, disagree. I would suggest that the biggest threat the sector faces comes from pensions.

Post by CFG

 Without being too hysterical, there is a pensions crisis looming in the sector. But I am not actually talking about the very real funding and compliance problems each individual charity can face. I’m referring to the public’s reaction to charities having to use charitable funds to deal with these problems. It is therefore essential that as a sector we understand the full extent of the challenges and know what to do in order to manage and mitigate the myriad risks arising from them.

On 10 July, CFG launched Navigating the Pension Maze. It’s a comprehensive document outlining in reasonably jargon-free language the problems and the current thinking. I heartily recommend it to you –whatever your issue, you are likely to find something of relevance inside. Alongside this we have launched the suitably-named Pensions Manifesto. This is a document setting out some of the big questions for the sector and what CFG would like to see happen, covering everything from multiemployer schemes to the Pension Protection Fund (PPF) levy. For some of the issues, we’re pushing on a reasonably open door – the Pensions Regulator and PPF, for example, are being receptive to our feedback on how they might achieve the right balance between member protection and the sustainable development of sponsoring employers. For other issues the door appears firmly shut. For example, at our London members’ meeting last month we heard Steve Webb, the Pensions Minister, tell us that there was no need for costly advice and guidance on auto-enrolment. In contrast, we feel that only being able to offer your staff the standard NEST (National Employment Savings Trust) scheme because you cannot afford to take advice on its suitability for your needs is not great. Similarly, the absence of affordable advice for more complicated issues, such as mergers, is not an acceptable position. Particularly for smaller charities, this does not feel equitable, but I suspect the door to assistance from government is closed. Finally, there are some issues where “the door is on the chain”. We’ve been delighted that the government has been interested in working with us to establish what can be done for Section 75 exit payments. Here, a debt crystallises when a participating employer wants to cease accruing benefits in a multi-employer scheme, with the result that they are trapped in schemes they feel ill equipped to continue supporting. We’re waiting to hear from government on whether it has been persuaded that our proposals offer that balance between member protection and employer sustainability.

We also need to get government agreement that this is not just special pleadings for charity – this is a proposal that can work across sectors. Hopefully the result will be that metaphoric security chain coming off and the door opening wide to welcome us in. Otherwise we may need your collective might to keep pushing this issue!

Caron Bradshaw Chief Executive

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