Mid-sized charities heading towards 'poor' value AE

The staging peak for the charity sector is late 2014 and 2015, when more than 25,000 of the UK’s 26,000-plus organisations will be required to auto-enrol their staff. But capacity concerns have already emerged across all sectors, with some employers having been turned away by existing providers.

Some advisers are set up to help smaller charities with auto-enrolment at reasonable prices

‘Auto-enrolment for charities: a how-to guide’, published by the Charity Finance Group, found 76 per cent of the 210 respondents said they were “confident” or “very confident” in their capacity to implement the reform. 

But the report questioned whether some charities have underestimated the scale of the task at hand.

Jane Tully, the CFG's head of policy and public affairs, said the "low frequency" of pension investment strategy reviews among charities was also a concern.

"We would urge charities to review these regularly, as they would their main portfolio of investments for the charity," she said. 

Investment and governance were areas highlighted where charities were judged to have fallen markedly short. The report found:

• A fifth reviewed their investment strategies every two to three years, while nearly 50 per cent said they do not review their strategy at all; and

• Half of respondents “appear to have no formal governance arrangements in place”. 

Patrick Bloomfield, partner at consultancy Hymans Robertson, said: “Smaller charities will experience the sharp end of well-intentioned government policy, which the financial industry struggles to deliver at an economic price."

He warned that charities that offer decent schemes could end up “overpaying” if they auto-enrol employees into their existing schemes. 

“Some advisers are set up to help smaller charities with auto-enrolment at reasonable prices. It will pay to shop around and find someone who is familiar with your situation,” he said. 

Stephen Nichols, chief executive at multi-employer scheme The Pensions Trust, said he was not surprised by the report’s governance findings, as many employers across all sectors have historically taken a “set and forget” approach to their DC schemes. 

He said that so far, most employers have been focusing on the data and process issue rather than reviewing the provider, but mandatory triennial staging should change this. 

“And once you start getting into the process where there’s a focus for your organisation on pensions every three years, I think people are going to start coinciding that with a review of their pension provider,” he said. “It will keep coming up on the management list of things to do.”