UK – A recent survey by the Society of Pension Consultants (SPC) has found that complexity and compliance are rivalling cost as the biggest stumbling blocks for employers trying to set up pension schemes in the UK.
According to the results, 54% of the survey participants described high costs as the main obstacle for new pension funds. However 46% believed complexity and compliance were the new Achilles Heel in the pension fund industry.
The participants – all SPC members – were sent an e-mail poll in July asking what they considered to be the biggest obstacle to employer pension schemes. They could choose between cost, complexity and compliance.
According to SPC PR committee member Kevin LeGrand, the narrow gap between the three camps was a great surprise.
“I think everyone expected an overwhelming majority to choose cost. But we can now see that people in the industry are beginning to realise and understand the complexities of the process. And in time complexity and compliance may well overtake cost.”
The SPC launched this survey “because we and our members have been concerned for a long time about the factors influencing the extent to which employers provide pensions for their employees, and the difficulties associated with this,” said LeGrand.
According to the SPC, cost could be partly attributed to successive governments, which have imposed new benefits after the inception of schemes and worsened the tax treatment of schemes.
However, compliance and complexity rest squarely on government’s shoulders said the group.
“The Pensions Act 2004 is very far from the simplification which we hoped for when Alan Pickering began his simplification review, but the government can still make a big difference by ensuring that codes of practice, most of which are still in draft, do not become regulations by the back door,” said SPC PR committee chairman Roger Mattingly in a statement released today.
“It is also essential that the new pension taxation regime does not slide into the complexity which forced the abandonment of the old rules.
“We need to avoid falling into the trap of creating complexity for everybody by seeking to block off every tax loophole, real or imagined, and complicating the whole system as a result.”
According to LeGrand, only now are companies beginning to dig under the “top-level stuff” and delve into the details – which until this point have been hard to ascertain.
LeGrand said that the results of the survey would be fed through to government by the SPC, which is “constantly in high-level discussions with government ministers.”
“We must do so to have an impact and get our message across. It will be shaping SPC’s responses with government,” he said.