Workplace pension replacement for pay rise?
Discussion
The employer of a friend of mine has finally set up a workplace pension and is contributing 1% of her salary, after stalling on setting it up for a couple of years. Grumbling has been made about the pension (with the effect that the employees feel guilty for signing up to it), though prior to this a pension was mentioned for half a decade like a dangled carrot that never materialised.
She hasn't had a pay rise for almost 4 years, and is already underpaid for the amount of work she does.
The comment that was made to her is that the employer considers the pension to be a pay rise.
We both feel this is unfair, but is this normal practice?
She hasn't had a pay rise for almost 4 years, and is already underpaid for the amount of work she does.
The comment that was made to her is that the employer considers the pension to be a pay rise.
We both feel this is unfair, but is this normal practice?
PurpleMoonlight said:
Pension is deferred pay, so I guess technically it is a pay rise.
Are you sure you have your facts correct regarding the implementation date? It is only lawful to postpone the staging date for up to three months I believe.
I don't know the exact situation. I meant they dragged out getting anything in place and made it clear it wasn't a priority. They didn't postpone the staging date as far as I know.Are you sure you have your facts correct regarding the implementation date? It is only lawful to postpone the staging date for up to three months I believe.
Would you say many employers are doing the same? She's pretty put-upon in her job and is feeling very frustrated, and this pension as pay rise seems like a kick in the teeth after remaining loyal and putting up with more and more work.
Can you explain 'deferred pay'? I don't know a huge deal about pensions.
PurpleMoonlight said:
A 1% pension contribution is a 1% additional cost to the employer. I see no reason why they should not implement that instead of a salary increase. Salary must still comply with the minimum wage of course.
If the employee doesn't like it they are free to seek employment elsewhere.
I see.If the employee doesn't like it they are free to seek employment elsewhere.
What I'm trying to get an idea of is whether most companies would consider this normal practice? Are most companies that are having to implement workplace pensions deciding to tell their employees that this is their pay rise, and therefore is it causing employees who are poorly paid to opt out of the pension just to make ends meet?
V8S said:
I see.
What I'm trying to get an idea of is whether most companies would consider this normal practice? Are most companies that are having to implement workplace pensions deciding to tell their employees that this is their pay rise, and therefore is it causing employees who are poorly paid to opt out of the pension just to make ends meet?
Yes it's normal practice for some companies. Most (if not ALL) companies constantly try to work out how much/how little they need to pay in order to get the right staff. There are a multitude of factors that need to be taken into consideration. For example how well the company is doing, how easy it is for the company to recruit and retain staff, the attitude of the management towards employees etc.What I'm trying to get an idea of is whether most companies would consider this normal practice? Are most companies that are having to implement workplace pensions deciding to tell their employees that this is their pay rise, and therefore is it causing employees who are poorly paid to opt out of the pension just to make ends meet?
V8S said:
PurpleMoonlight said:
A 1% pension contribution is a 1% additional cost to the employer. I see no reason why they should not implement that instead of a salary increase. Salary must still comply with the minimum wage of course.
If the employee doesn't like it they are free to seek employment elsewhere.
I see.If the employee doesn't like it they are free to seek employment elsewhere.
What I'm trying to get an idea of is whether most companies would consider this normal practice? Are most companies that are having to implement workplace pensions deciding to tell their employees that this is their pay rise, and therefore is it causing employees who are poorly paid to opt out of the pension just to make ends meet?
PurpleMoonlight said:
As Eric stated it is unlawful for an employer to encourage employees to opt out. Advising them they could have the employer pension contribution as salary instead would be seen as encouragement.
I don't think they were advising that she could have either pension contributions OR a pay rise. A pay rise is not on the table at all at the moment. The pension is because it's been forced by the Gubberment.My friend is annoyed that, having waited 4 years for a pay rise, she's now told that 1% in a pension is her pay rise.
So, she wonders, if she didn't take the pension whether she'd be better off waiting for a real pay rise instead, which is more likely something like 3%.
Davel said:
I've implemented the pension scheme but also given my staff a pay rise.
I assumed that that would be standard, as in someone's performance in their job would be rewarded separately from any workplace pension that a company has been forced to implement.It feels to her like it's a way for the company to give her a cheap pay rise. When she was given extra work, a woolly future pay rise was dangled in front of her and this seems like a slap in the face.
It's compulsory that the employer sets up a pennsion scheme. It's NOT compulsory that the employee has to join the scheme.
the procedure is
a) employer sets up scheme
b) employee is automatically enrolled into scheme
c) employee has the ability to opt out immediately or at any time AFTER they have been enrolled
The employer is not allowed to put any pressure on the employee persuading them to consider opting out of the scheme.
the procedure is
a) employer sets up scheme
b) employee is automatically enrolled into scheme
c) employee has the ability to opt out immediately or at any time AFTER they have been enrolled
The employer is not allowed to put any pressure on the employee persuading them to consider opting out of the scheme.
V8S said:
I don't think they were advising that she could have either pension contributions OR a pay rise. A pay rise is not on the table at all at the moment. The pension is because it's been forced by the Gubberment.
My friend is annoyed that, having waited 4 years for a pay rise, she's now told that 1% in a pension is her pay rise.
So, she wonders, if she didn't take the pension whether she'd be better off waiting for a real pay rise instead, which is more likely something like 3%.
I don't follow that logic.My friend is annoyed that, having waited 4 years for a pay rise, she's now told that 1% in a pension is her pay rise.
So, she wonders, if she didn't take the pension whether she'd be better off waiting for a real pay rise instead, which is more likely something like 3%.
If the employer was willing to provide a salary increase of 3% wouldn't they already have done so? Or maybe split 1% pension and 2% salary.
I suspect the employer doesn't want to provide a pay increase and is using the pension contribution as get out. The employer contribution is increasing to 3% over the next couple of years too so any salary increase in the foreseeable future may be unlikely.
V8S said:
I don't think they were advising that she could have either pension contributions OR a pay rise. A pay rise is not on the table at all at the moment. The pension is because it's been forced by the Gubberment.
My friend is annoyed that, having waited 4 years for a pay rise, she's now told that 1% in a pension is her pay rise.
So, she wonders, if she didn't take the pension whether she'd be better off waiting for a real pay rise instead, which is more likely something like 3%.
If she has not had a pay rise for 4 years the company obviously needs to (or wants to) keep costs to a minimum. They have just been forced to offer the 1% extra in the pension which will increase their costs. That money (and the admin costs) has to come from somewhere so no surprise then that they are unlikely to be giving a pay rise at the same time.My friend is annoyed that, having waited 4 years for a pay rise, she's now told that 1% in a pension is her pay rise.
So, she wonders, if she didn't take the pension whether she'd be better off waiting for a real pay rise instead, which is more likely something like 3%.
What makes her think that not taking the pension would result in a 3% pay rise? 0% for 4 years to 3% sounds like a big change even it the costs had not risen due to the pension. Was that really going to happen?
Put it another way, either company has not got the money, or they don't value their employees enough to keep them happy. Either way, if is she wants a pay rise she needs to get herself another job.
If she doesn't think she can get a similar job for better money then that might give her a clue as to why she is not getting a pay rise
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