Market Influences

Due to the present economic climate many organisations have not given staff pay rises in 2008, 2009, 2010 including those who would normally give a non statutory increase in line with inflation at all levels within the workforce. We are sure for many loyal or new employees the news they have now begun to rise again during 2011 comes as a financial relief. Many mid to senior level employees during 2008-2010 also did not receive or forfeited bonuses. This trend is already changing during 2011 and forecasts for further improvements in the economy for the UK in the later part of 2011/early part of 2012 hopefully mean that future pay scales will eventually increase in line with the work undertaken. Bonus reviews are recommencing, with end of year payouts in 2011 for those hitting objectives or who have suffered a shortfall in the previous three years. The very positive news is that for 2010 the average pay increase was between 0 and 3.9% in the occupational pensions sector.

The early part of 2011 has seen a surge of recruitment activity for the Occupational Pensions Industry, with employees finally feeling safe enough to consider moving to a new employer to progress their career. This is at all levels, as the market improves the demand for new staff increases from very junior levels as employers grow organically, at senior levels where top industry contributors are headhunted or apply direct to new senior appointments externally with new organisations back in a growth and development phase.

Salaries have changed very little over the past three years, and in undertaking a review of current market rates for occupational pensions roles Abenefit2u found little change to three years ago, despite the cost of living rising considerably, in particular the cost of travel. Market surveys conducted very recently by Abenefit2u directly and also by reviewing alternate sources of salary data show that by the end of 2010 and for 2011, pay rises were being awarded and salaries were increasing anywhere from 0 – 3.9% across the board from administration to management level.

Other Influences

When reviewing salary bandings it is important to understand why salaries can vary not just across the UK, but for one region. Please find to follow in this report a breakdown of these factors.

Influences also affecting basic salary/overall package:

Type of organisation / Product / Market
Corporate culture / Work environment / Work and life balance / Reputation
Employee longevity of service / Commitment to industry / Value to your business
Qualifications
Career prospect / Training & Development Programmes
Type of role / Specialist skills / Commenced study
Supply and demand at any given time
Status of role, Temporary / Contract/Permanent
Location
Benefit Package
Bonus / Incentive Schemes
Staff Retention

Retaining Staff, Attracting the best

If an employer is keen to retain existing staff, remain competitive and attract the best candidates available for their role there are a number of factors to take into account other than simply the basic salary:

1. Type of organisation / Product / Market

What a company does/sells will affect their profit (and loss in recent years), and ability to pay high/low salaries, offer competitive/flexible benefits, bonuses, training, study assistance, career progression, etc.
E.g. In-house pension scheme companies.
In recent years for example supermarket chains have flourished, so have large DIY chains, whilst some food and beverage establishments or construction industry firms have had to make redundancies or worse, close.
E.g. Third Party Administration Providers/Consultancies.
Many large third party administration providers/Consultancies have lost clients and made redundancies, whilst smaller providers have won this business and expanded.
Where one market suffers, another might benefit, and this will affect pay and reward offered within that organisation. If one employer is keen to attract employees from other organisations, they need to consider what they do, does their salary compete? If not, how can they improve by offering other benefits, which do not always have to be financial (see later).

2. Corporate culture / Work environment / Work and life balance / Reputation

Historically, prior to the credit crunch a larger percentage than not, of third party administration providers and/or consultancies, paid slightly higher basic salaries than the average in-house pension scheme department for pension administration staff. Because it can be (not in all cases) a more stressful environment, with longer hours, higher remunerations are offered to attract and retain staff the company could not otherwise, or as compensation for the heavy work demands in a constantly (not always positively) challenging environment.

Abenefit2u would not say the above is true of the present market. Salaries in this sector have remained static and are still only going up marginally in 2011 within the longstanding players. Many new start ups on the other hand are being extremely generous to attract the best talent pool, but this may still not change the demands and challenges of working in a service level/sales driven environment. Therefore, employees will often be willing to take a drop in/sideways move in their salary to make the transition to working for an in-house pension scheme in a less demanding environment, with a better work/life balance.

3. Employee longevity of service / Value to your business / Commitment to industry / Awards

Employee longevity of service / Value to your business
You cannot put a price on knowledge, but if you could surely you would buy it? This thought is well worth considering when salary benchmarking an employee against other employees in the market doing the same role, but who has been with your company for a considerable amount of time. Their knowledge will not only be about their role but about your organisation and how the function you provide works, often including valuable historic data. What would the cost be to replace this employee, what knowledge might be lost alongside their knowledge of the job? There is a balance between being ‘held to ransom’ by an employee who without them the function should collapse, in which case you should organise contingency planning ASAP, no one should be indispensable.
Not every organisation deems loyalty as something to be rewarded, but some do, and historically where long service additional pay rewards have been given, staff turnover has been shown to be less than those who do not apply this activity. Paying a small percentage of extra remuneration to longstanding employees, a ‘loyalty bonus’ or ‘pay reward’ to retain talent is far more cost efficient than recruiting a replacement.

Commitment to industry / Awards
Does your employee undertake additional activity for the benefit of the organisation?
E.g.

Examiner to industry professional body for qualifications
On judging panel for awards
Entering industry awards/Winning industry awards
Writing articles for industry magazines
Giving Talks and Presentations
Attending Shows and representing company

Acting as an ambassador for the company, bringing the company name to public attention, demonstrating it is a good place to work may not always be easy to put a price on, but is something worthy of consideration by those reviewing salary and benefits. No matter what the market benchmark, if you have an employee who has raised your company profile, they are a greater asset than someone simply fulfilling the Job Description. They are going ‘above and beyond the call of duty’ and recognition of this is recommended. From direct financial reward, to other forms of compensation e.g. expenses, working from home on projects, time off to attend events.

4. Qualifications

Having known this market for over twenty years (Dianne Beer, Director of Abenefit2u) Abenefit2u have seen a time where skills and experience were the prerequisite to success and although valued, qualifications were not essential, or the deciding factor in the selection of one employee versus another, this is no longer the case. Rarely are qualifications not stated on a Job Description, and are now more often listed in the essential as opposed to desired column. For the occupational pensions industry, The PMI, Pensions Management Institute Qualification is still the most desired qualification by employer and most popular to study by employee. Abenefit2u specialises in many other areas of recruitment e.g. Human Resources, Employee Benefits recruitment. For further information on qualifications in these areas please contact us directly. The number of pensions professionals attaining FPMI status continues to grow, a testament to the growing value of qualifications to employees.

It is therefore not surprising to learn that financial value is placed on the possession of academic qualifications. Anywhere from £2,000 to £5,000 in addition to the standard basic for a non qualified employee.

Financing a trainee through their exams can also act as a way of retaining staff, particularly trainees and juniors who pre credit crunch statistically moved every 2-3 years. Employers will often offer a set amount bonus or pay rise per exam to employees, with a ‘lock in’ clause that should the employee leave within 1 year of passing their exams, the cost of study must be reimbursed by employee to employer. As the PMI qualification for example can take on average employees five years to complete, offering study benefit is a sensible method to retain staff for a number of years. Many employees also offer study leave and time off for examinations.

5. Career prospects / Training & Development Programmes

Financial gain although important is not always an employees' only or highest motivator. An employer offering a higher salary may not always be chosen over one offering a structured training programme, and structured career path. Employees will soon move on and not up if not given the right environment to develop, no matter how well paid.

Abenefit2u ongoing market analysis shows employees still (as this ‘motivator’ has been in the top 5 for many years now) value the role they do and the work environment more highly than financial income. When asked their ‘top motivators’ for moving, the prospect of a new and more challenging role, better career prospects and long-term personal development at work were ranked above moving for financial gain.

6. Type of role / specialist skills/commenced study

The salaries listed in this survey are for a Junior Pensions Administrator to the occupational Pensions sector but, if the role demands some additional skills this individual may require additional remuneration, or a company may pay slightly more for a part qualified employee (they are unlikely to be qualified in their field yet at this level, but they may have commenced study).

7. Supply and demand at any given time

If demand exceeds supply then a ‘salary war’ can follow. This has not been seen for many years within the pension industry and it is unlikely to happen again for many years to come, but it is a factor in setting salary bandings for any organisation. For example when ‘SIB review’ was being undertaken, Junior Pensions Administrator salaries went sky high, with some employees leaving permanent roles to participate in these contracts, and leaving roles behind, very hard to replace with a candidate of the same salary.

8. Status of role, Temporary / Contract / Permanent*

If the post holder is being employed on a temporary or contract basis, under current employment law they are entitled to the benefits of a permanent employee, with some exceptions. Where they are not receiving all benefits there should be compensation within the salary to compensate the contractor/temporary to purchase directly e.g. a contractor would not be entitled to study or examination fees if the company had a ‘payback scheme’ should the employee leave within 1 year of passing exams.

9. Location

London based employers have the bonus of a much wider employee catchment zone than provincial based companies. However, travelling to and from London is far more expensive for employees than working locally. Companies in London should offer a set amount to each employee towards travel (commonly called London Weighting, LW) or ensure they have reviewed the average commuting distance for employees and calculate the cost of this for the given year, and add this to the basic salary. Some employers also provide Luncheon Vouchers to assist with the higher prices of food in London.

10. Benefit Package

Alongside Bonus and Incentive Schemes, the Benefit Package a company offers is a key contributor to wide salary bandings for the same role. The benefit (and bonus) package offered by one employer to another can vary greatly including the type of pension arrangement and employer contribution (although this is becoming less of a factor with the changes in pensions provision by most employers in the UK now and into the future). If an employer offers only the bare minimum of company benefits, they may have no choice but to offer a higher basic salary if they want to attract suitable employees.

11. Bonus / Incentive Schemes

It is a fact that if an employee knows they will be rewarded each year for their achievements they excel much more than those employees who know their employer only pays what is required each year and does not offer any incentive scheme. Statistics also show employees who are not rewarded for their achievements will move employers within 1-2 years, many sooner.

12. Staff Retention

Paying an employee a competitive salary or even giving a pay rise to an employee to be more market competitive, shows their loyalty and the work they do is valued. Empowering to undertake new projects and learn new skills will mean they are continually developing and feel job satisfaction alongside knowing they have the potential to increase their income by learning and doing more within the role.

Summary

There are average salary bandings for each region of the UK and every role, but there are also much lower and much higher salaries for each region and role. The salary paid will depend on who the employer is, what they do, where they are based and what value they put on the retention of staff. Provincial positions historically pay £3-5,000 p.a. less than London based. Northern roles pay as much as £5-10,000 p.a. less than the same role in the South of England. At a junior level the difference may be minimal, at a senior level it may be much greater. Government departments and regulatory bodies traditionally pay less than most private sector organisations.

We hope the aforementioned is helpful and beneficial. Please do not hesitate to contact Abenefit2u at any time should you need any further advice or assistance.