The UK pensions crisis - introduction of a standard - Business Works
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The UK pensions crisis - introduction of a standard

Alexandra Kitching, PQM Manager at NAPF The UK is experiencing a pension saving crisis, with nearly fourteen million people at risk of poverty in retirement. Fortunately, the Government is introducing reforms from October this year to automatically enrol staff into a pension and it estimates that they are likely to bring between 5 and 8 million workers into pensions saving.

But these reforms are coming at a bad time when many people are questioning the value of a pension. The National Association of Pension Funds (NAPF) found the public confidence in pension is at a record low. This could jeopardise the success of the reforms. Further NAPF research indicates that about 30% of workers could opt out from their new pension when auto-enrolment is introduced.

The low pensions confidence is very worrying and is caused by several factors. Often people find it difficult to understand how pensions work, and are concerned with the impact that the high fees charged by providers have on their retirement savings. If we are to get people saving more, we need to re-engage them with pensions.

The Government and the pensions industry are working hard to achieve that. One approach has been the Pension Quality Mark (PQM) initiative to drive good standards among UK pensions. Launched two-and-a-half years ago, 150 companies have achieved the PQM for their staff pensions, and over a quarter of a million employees are saving into pensions covered by the standard.

The PQM is a standard recognising companies that are offering good quality Defined Contribution (DC) staff pensions. It is given to those companies that have good pensions contribution levels, good pensions communications for staff, and good governance.

Employers have responded to PQM enthusiastically. L’Oreal, Heineken and Kellogg’s are just a few of the prestigious brands that have achieved PQM. These employers understand the power that pensions exercise in recruiting and retaining staff and want to make it crystal clear that they offer a good quality pension.

This mark is also of high value for workers, who in many cases do not have the time or the knowledge to gauge whether or not the pension offered by their employer is of good quality. With PQM, they can instantly know if their company pension is good.

The UK is in bad shape when it comes to saving for its old age, and we need to change that. The good news is that we are heading in the right direction. The Government’s upcoming auto-enrolment reforms will make a huge difference, especially among small employers who do not offer a staff pension at present. Also, the State Pension reform that the Government has recently announced will help. But also initiatives from the industry are fundamental in securing the step changes that our country needs and PQM is a strong example of this.

For more information about the Pension Quality Mark, please visit:

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