How to navigate the charity pension maze

By Caron Bradshaw, Chief Executive, Charity Finance Group

9 September 2014

In this guest blog, Caron Bradshaw explains how the CFG has created a guide to help charities navigate the pensions landscape.

"An intricate, usually confusing network of interconnecting pathways" aptly defines the pensions landscape today. Not least because, from nearly every vantage point the landscape looks bewilderingly different; sound orientation of the pension maze depends on the sum of these perspectives.

This is the starting point from which the Charity Finance Group embarked on an ambitious project to produce 'Navigating the Charity Pension Maze'; a best practice guide for finance and human resource directors, chief executives and charity trustees to get their charity on track to best manage their pension commitments.

We were able to bring together some of the most experienced practitioners working in the sector in order to provide readers with an holistic overview of how charities can manage the financial implications of their pension commitments whilst boldly embracing their responsibilities as employers.

The Maze provides a starting point for charities to understand their pension provision as a part of their strategy; the essence of sound pension scheme trustees and charity trustee relationship management; the advantages and disadvantages of participating in defined contribution, defined benefit, and multi-employer schemes; an overview of the waves that auto-enrolment has been already and will continue to make in the sector; the technical ins and outs of accounting for pensions; and the considerations that need to be borne in mind when contracting, outsourcing and restructuring; all this against a background of a transformational public policy agenda on pensions.

CFG has also recently released its 'Pension Manifesto'. While there is much that charities can do to consider how to best manage their pension commitments (CFG's Maze being a starting point), the shape of public policy on pensions too often places charities in a difficult position. The devastating impact that a Section 75 debt can have on a charity's liquidity or the shock that will be felt by many of the smallest charities, unprepared for the steady advance of auto-enrolment, calls for legislative or policy change to support a better operating environment for charities.

As employers, charities are coming under increased pressure to explain why the management of their pension commitments should be taken in a different stride to other sectors. A simple answer is that some, especially smaller charities, have had limited capacity and skills to tackle the pensions issues that they now face.

This doesn't mean that charities aren't highly conscious about the role that pensions play in attracting and retaining quality staff as a part of an overall benefits package. Indeed, this is felt only too keenly when in competition with private and public sector compensation packages.

The simple answer doesn't do full justice, however, to the highly temperamental incentive structures on which most charities rely for predictable income - donor loyalty. If donors are guided by an aversion to high pension liabilities, and consequently become more selective in their giving choices, otherwise reputable charities, delivering vital public benefit, will suffer.

Where the Maze is a starting point for best practice, the Manifesto is a starting point for dialogue on some of the key pension challenges charities are facing. Our Pension forum, to be launched in October 2014 will provide a sounding board for developing practical solutions for some of these problems.

CFG's Maze and Manifesto are complementary and inseparable. While the Maze depicts the most up to date, comprehensive guidance for charities, the Manifesto calls for fundamental changes to unravel some of the unnecessary complications that make the pension Maze (at times) impenetrable.


  • Pensions
  • Charities

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