If FTSE 100 employers can mess up pensions this badly what hope is there for us?
My wife Sue has recently been made redundant by the drug company AstraZeneca. This morning we got a letter from AstraZeneca letting us know that they had not paid enough into Sue’s pension while she was on maternity leave. It seems they had only paid their contributions based on her reduced maternity pay rather than her full pay before her leave. All in all it seems that over 900 people like Sue were affected.
When you take into account the internal cost of reviewing the mistake and the cost of compensation I’m sure it’ll run into hundreds of thousands of pounds.
The reaso
n that the AstraZeneca letter struck a chord is that I’ve spent the last couple of weeks advising employers about their duties under the new pension rules. Re-reading the detailed guidance issued by The Pensions Regulator has driven home the scale of the work that’s going to be required for employers to comply.
Take for example the task of identifying your workers. Not as easy as it sounds if you use self-employed contractors, agency workers or have non-executive directors, volunteers or Trustees.
Then you have to split your workforce between three categories of “jobholder” as the civil servants have called them. Then you’ve got make sure that you know when one of your jobholders moves category so you can make sure you do the right thing. I have included a graphic below from the The Pensions Regulator guidance just to give you a flavour:
It’s going to take a major change not only to HR and Payroll systems but also an Employer’s internal processes to track all these coming and goings. So, in essence, the new Rules are as much about compliance as they are the headline extra pension costs.
And that brings me nicely back to the AstraZeneca letter. Whilst it’s nice to get the compensatory payment they’ve made; it shows how badly wrong one of the top 100 quoted companies can get a simple change in process so badly wrong.
The changes required for the new pension rules dwarf the changes that AstraZeneca 
should have made to their maternity policy back in 2003. For smaller employers with limited resources it’s a daunting task. A survey of HR and Finance Directors in June 2011 found that over 40% of those questioned had no idea of the deadline for complying with the new rules.
In the words of the author of the report “It’s heading for a car crash”.
That’s why we’ve already started to plan out the compliance project with our clients. For some the start date is just over a couple of years away.
It’s not too late if you haven’t done anything yet. Click here to contact us set up a meeting as soon as possible.
Steve Clark