Millions now facing the lowest pension ROI since records began

Despite saving the same amount of money into their pensions, older employees now face the dire prospect of getting about half the income they would have received 15 years ago, research reveals today. And this comes on top of the collapse in final salary pension schemes, with millions locked out of the best type of retirement provision.

Experts said employees who want to retire are facing a nightmare which no previous generation has had to cope with.

The plunge in pension payouts is because annuity rates have nose-dived. Annuities offer a guaranteed monthly income to those who have saved into a pension pot, but over the last month several major investment firms, such as Aegon, Aviva and Legal & General, have started to cut their annuity rates. Their rivals are almost certain to follow and experts predict that rates will fall even lower over the coming months. Around 50,000 people a year buy an annuity, with up to £20billion of their hard-earned cash ploughed into the investment products.

Today's research, from the financial information firm Moneyfacts, looked at the annuity which a £10,000 pension pot can buy. In 1995, a 65-year-old man buying an annuity would have received an average annual payout of £1,111. Today, a man of the same age with the same pension pot would get just £606 a year, a drop of 5 per cent which shows how rapidly annuity rates have plummeted. Just 12 months ago, the same fund would have bought a pension of £647 a year.

The average pension pot is about £30,000. For a man aged 65, this would have resulted in an annuity worth around £3,300 a year in 1995, compared with just £1,800 today.

The report's author said the findings would be 'a rude awakening for many'. The victims will be 'baby-boomers', born after the end of the Second World War who are now starting to retire. After a lifetime of saving into a pension, many will be shocked and disappointed by the income that they will get from it, and feel that they are being forced into staying at work.

PAs are encouraged to check that their bosses best interest is being preserved by good pension management; find out who does it and that they are on top of the rapidly declining marketplace.

Gareth, APA

Wishing the day away

Council staff 'waste’ more than two-thirds of their working day according to research by a management consultancy.

The study indicated that only 32% of working time was spent productively. The cause it reported was poor supervision. This was far lower than the equivalent productive time by private sector employees, which was still only 44%.

Paul Weekes, principal consultant at Knox D’Arcy and the report’s author, said improving productivity in local government could ‘significantly offset’ planned cuts in the Government’s deficit reduction plan. Consultancy firm Knox D’Arcy, which carried out the research, said if all councils improved to match the private sector, they could increase productivity by a third and do the same amount of work with 500,000 fewer staff.

The research also revealed that public sector managers spent just 15 minutes a day on average actively managing their staff. It suggests that council managers lacked the skills to implement the scale of cuts requested and so were as likely to deliver chaos and reduced services as savings.

From its own work with the public sector APA has seen what can be done to increase management productivity by empowering PAs (which it considers a poorly used resource in some public sector areas) and has specifically created its programme called ‘The Productive PA’ with the NHS to support them. APA Director General, Gareth Osborne, said, “From early research by one of the Scottish universities we know that 31% of time is ‘wasted’, we then found that another 25% is unproductive; constantly being interrupted, redirected or inadequately briefed and managed leading to procrastination and frustration. We can all learn from these chilling facts and look at ways to improve output from 9 to 5.”

APA

40-years of good intent!

Despite 40 years of equal pay legislation a survey by the Chartered Management Institute has shown a male manager in the UK earns £10,071 more on average than his female counterpart. It has suggested that girls born in 2010 will face the probability of working for around 40 years in the shadow of unequal pay.

At a senior level, male pay outstrips female pay by as much as 24pc, the survey found. Even at a junior level, male executives were found to have received £1,065 more than females carrying out the same work, the study of pay at 197 organisations, covering 43,312 employees. This is despite a 2.8pc growth in pay packets for women over the last year, compared to 2.3pc on average for men.

APA lobbies hard for pay equality and stridently supports CMI’s call for Government to “take greater steps” to enforce pay equality by naming and shaming organisations who fail to pay male and female staff fairly. But it’s not just Government that needs to enforce its own legislation, businesses also have to neutralise subliminal gender biases it the equality goal is ever to be achieved..

Gareth Osborne, DG of APA said, “The forecast of continued decades of pay inequality cannot be allowed to become reality. We must press Government to take the matter much more seriously.”

The IT industry was the worst offender, the survey showed, with women on average getting paid £17,736 per year less than men. The pharmaceutical industry generally paid its female workers £14,018 less than males.

Across the regions, women in the Midlands fared the worst, taking home £10,434 less than men doing the same jobs, the survey, carried out in conjunction with XpertHR, showed. Even the smallest pay gap, in the North East, stood at £8,955.

The Equal Pay Act, designed to eradicate gender inequality, was introduced in 1970. Four decades after the legislation, the national gender pay gap stands at 16.4pc, according to the Office for National Statistics. In certain sectors, such as finance and law, women working full time can earn just over half the amount men get.

The Government’s new Equality Act due to come into force this October, is expected to outlaw contractual gagging clauses that prevent colleagues from discussing pay and bonuses. Theresa May, the Home Secretary, said the move will bring an end to the “culture of pay secrecy” that has dominated the workplace for decades.

APA

As we head towards equality

An employment appeal tribunal has backed an equal pay claim by female workers at a Merseyside hospital, which could pave the way for further such challenges. The original case, supported by the union Unison, took St Helens and Knowsley Teaching Hospitals NHS Trust to a tribunal for paying women a lower wage at weekends than men.

The women, working as healthcare assistants, domestic supervisors and receptionists, were paid time-and-one-third for working on a Saturday, and time-and-two-thirds for working on Sundays and bank holidays. But the men who were doing comparable roles received a higher pay rate of time-and-a-half for Saturdays and double time for Sundays and bank holidays. The trust argued that unsocial hours payments were part of their staff's normal working week, and that payments for these hours could not be separated from basic pay. In December 2009, a Newcastle tribunal found in favour of the trust.

But now a London appeal tribunal has found that women working at St Helens and Knowsley NHS Trust should be entitled to the same level of unsocial hours pay as men. This decision means women at the trust and at other hospitals could challenge pay discrimination on the same grounds. The appeal judge agreed with the female employees that unsocial hours payments are a separate term of the employment contract, and can be directly compared.

Audrey Williams, head of discrimination law at Eversheds, said: “In essence, this case confirms previous cases including a previous Swedish midwives' case for equal pay mentioned in the judgment. “The debate is often around trying to identify and break down the different components in a reward package, to find the discrete elements.

“When employers are reviewing their pay arrangements – undertaking an equal pay audit for example – they need to do so by reference to each element of reward, benefits, individual pay provision, pay term and pay component in the contract; breaking it down and analysing it for any gender pay distinction in a term-by-term comparison.”

APA backs all moves made towards equality of pay for both sexes and will continue to lobby for this in all cases.

Gareth, APA
Source: PM Online 10/08/2010

Focused on figues

Within the last hour the Bank of England has downgraded its growth predictions in its latest overview of the financial health of the UK.

Bank of England Governor, Mervyn King, adjusted down the growth estimates made in May of 1.5 per cent growth this year and 3.4 per cent in 2011.

He stressed that the Bank is committed to steering a steady recovery and avoiding dramatic measures or effects. He suggested it would be many years before the balance sheet would return to normal and recovery is likely to continue but weaker than was previously thought. He refused to be drawn on how much this was due to measures introduced by the new Government.

Looking to 2011 he suggested that inflation would remain above 2% and growth would remain around 2.5%.

He explained how the damage to High Street Banks had been felt mostly, but not exclusively, by small businesses which couldn’t justify borrowing at the new higher rates that Banks were forced to charge.

In parallel, new figures from the Office of National Statistics showed employment saw its largest rise for more than 21 years as the jobless total fell 49,000 in the three months to June. Unemployment fell to 2.46million after the biggest quarterly decrease for three years. The drop came after a 184,000 hike in the number of employed to 29million, marking the largest quarterly rise since May 1989.

APA

A call for Mentors

Small businesses need mentors to help them grow and avoid making the same mistakes as their predecessors; it has been claimed by Tim Campbell, a former winner of TV show The Apprentice.

This comes in the same week that APA has launched its own Mentoring Service for PAs with experts drawn from within its membership as Fellow Mentors, who generally offer their support for free to other members, and external, fee charging Consultant Mentors. Both groups are fully validated and approved against a Code of Professional Practice (Ethics). APA Members are encouraged to view the new Mentor Zone within the website for more details.

Tim, now chief executive officer of the Bright Ideas Trust, said that for companies to grow there needs to be adequate professional support in place. He added that Jobcentre Plus should offer support to small firms in terms of providing the right staff and training and stressed the importance of providing young people with a business education and supporting those who want to become entrepreneurs. Cashflow was identified as one of the major obstacles firms are facing as was the upcoming VAT rise.

Gareth Osborne of APA said, “All business people need support to develop skills and expertise and the best way to learn is from your peers. In the case of PAs who better to act as a Mentor than another PA and we have some of the very best in membership.”

APA

Labour Market stalls

Labour demand in private sector continues to off-set the sharp fall in demand in the public sector, but not for long, says the latest quarterly KPMG Labour Market Outlook survey

The survey indicates that the employment recovery has stalled, but that the disparity between the public and private sector remains significant. But worse is to come as redundancy intentions have picked up among the 600 employers surveyed, representative of the whole economy.

While recruitment intentions generally remain stable, the proportion of employers intending to make redundancies has increased for the second quarter in succession, returning to levels last seen a year ago. A third of employers (32%) expect to cut jobs during the next three months, up from 29% in the Spring quarter and 26% in the Winter quarter. The survey findings reveal that organisations in the public sector are once again going to be the most affected; a reflection of substantial budget cuts. Over a third of public sector employers (36%) are planning to make redundancies during the next three months, compared to 30% in the private sector and 24% in the voluntary sector.

Alan Downey of KPMG, says: "Managers in the public sector have woken up to the scale of the financial crisis that they face, and many are now contemplating redundancy programmes. Surprisingly, some are still intending to recruit, albeit at a reduced pace. The big question is whether the private sector can create new jobs in sufficient numbers and quickly enough to offset the downturn in the public sector. Are we about to return to strong and sustained economic growth, or will we experience a faltering recovery in which unemployment will rise steadily because of the retrenchment in the public sector? The survey suggests it is too close to call."

APA

Time for some sensible debate

APA is backing CIPD’s call for government to bolster [public sector] employee engagement in order to avoid mass strike action, despite swingeing cuts to public services

CIPD suggests there are a number of high stake options open to government in seeking to avoid strike action as spending cuts bite, but ultimately only a focus on building public sector leadership and management skills and improving consultation will make a real and lasting difference.

In its latest report, Developing Positive Employee Relations, CIPD highlights the higher stakes policy options the government should be considering to protect public services if there is an upsurge in industrial unrest, including banning strike action by workers involved in the essential services.

Other policy options open to the government set out in the report include legislation to require parties to public service disputes to take part in compulsory arbitration prior to industrial action and changes to balloting requirements so that ballots should be counted separately for each employer.

The paper highlights research from the CIPD's quarterly Employee Outlook survey series, showing:

- low levels of trust and confidence among public sector employees in senior management teams - just 16% of public sector employees say they trust their senior leaders

- 54% of public sector staff agree most people today are not willing to lose pay by going on strike, compared to 47% in the private sector.

- More than four in ten employees are in favour of banning public sector workers involved in the delivery of essential services from striking

Trade unions have the power to disrupt only if employees trust them more than they trust management. The fundamental need is not to 'manage the trade unions' it is to manage the employment relationship and communicate the case for change. Both sides have heavy duty weapons available to them but neither has much to gain from deploying them. Unions, government, frontline workers and public alike have far more to gain from a strategy focused on building trust and avoiding conflict.

APA

New train of thought

Anyone who, like me, travels regularly on the London Underground system knows that it is a horrendous experience on the hottest days of the year; not that it is that much better on the 360 others!

But relief is only a short distance away now that the first air-conditioned Tube train has gone into service on the Metropolitan Line; the first of a 191-strong fleet of new trains to be rolled out by Transport for London (TfL). TfL promises to have populated 40% of the network by 2015 with the new trains. It will have completed the Metropolitan Line by the end of 2011 and the Circle Line, the Hammersmith & City Line, and finally the District Line, by 2015. AT a total cost of £1.5bn.

The budget to cool Tube carriages on the London Underground was slashed by £10m in July to fund TfL cutbacks but the organisation has confirmed that the introduction of new trains would not be affected by this.

A heat map that monitored the Underground in 2008 found the Central Line was the hottest, with temperatures of up to 32C (90F). The Metropolitan Line recorded temperatures of up to 27C (81F) and the Jubilee Line was significantly cooler with most stations recording temperatures of 25C (77F).

I personally believe the benefits will be seen in terms of the productivity of the commuting workforce who will arrive at work less stressed and be less exhausted when the return home. I did it for years and can confirm it is draining; I’m off to search for the air-conditioned train.

Gareth, APA