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Mercer award successes

Mercer strives to lead the way in providing excellent client service and was delighted to be awarded the prestigious “Investment Consulting: 10 years of excellence” and “Investment Consultant of the Year” accolades at the 2009 Global Pensions Awards. A panel of 18 experts voted Mercer as the winner in both categories recognising the strength and depth of the company’s investment consultancy service and its global reach.

Mercer also won the “Communication Specialist of the Year Award” at the Pensions and Investment Adviser Awards and “Investment Consultant of the Year” Award at the Professional Pensions UK Pensions Awards. Prizes have also been secured at the European Pensions Awards and the Investment & Pensions Europe Real Estate Awards.

 View our 2009 list of Awards  

Swine flu – Is your business prepared?

It is difficult to accurately forecast how the swine flu (H1N1) virus will spread and what disruption it may cause this Autumn. The predictions from the Cabinet Office assume a 12 percent absence rate for swine flu¹ in the coming months, compared with an average of 3.2 percent² across all businesses in 2008. In other words, employers may have to cope with a four-fold rise in absence.

The Chartered Institute of Personnel and Development (CIPD) has recently advised that “all businesses should plan for a worst case scenario, where staff absence rates reach 50 percent”³. In response, Mercer has prepared a checklist to help employers identify the essential issues, solutions and information sources that will help organisations prepare, monitor and manage their workforce before and during a pandemic situation. To find out more, visit uk.mercer.com/h1n1swineflu

1 - Cabinet office, Bruce Mann CB (director Civil Contingencies Secretariat) Business Advisory Network For Flu, Swine Flu Planning Assumptions, 16 July 2009
2 - CIPD Absence Management Survey 2009
3 - CIPD press release www.cipd.co.uk/news/_articles/employers-warned-to-review-swine-flu-plans.htm

Pension catch 22

The Government should encourage focus on risk-sharing schemes, according to Mercer. Reviewing legislation to bring more flexibility into the design of pension schemes, to share the risk burden equally between employer and employee, would avoid what is currently a “pension catch 22”.

The current market volatility, allied to additional governmentimposed burdens, is forcing many employers to turn away from defined benefit (DB) schemes. As companies seek to reduce cost and risk, switching to defined contribution (DC) schemes, where the investment risk lies upon the members themselves, is proving to be a popular option.

However, as these schemes are also subject to the fluctuations of markets and annuity prices at retirement, DC scheme members on the verge of retirement are facing a smaller retirement pot than they would have hoped for.  Mercer has called on legislators to make it easier for employers providing DB schemes to reduce or avoid increased costs during economic downturns, and easier for DC schemes to provide underpins to reduce the potentially adverse effects of extreme market volatility on members.

Tax changes for high earners

The 2009 Budget and subsequent Finance Act have introduced a raft of measures that will increase the tax burden of high income individuals. Over the current and next tax year there will be increases to the top rate of tax to 50 percent, restrictions on pension tax relief for those with income over £150,000 per annum and the loss of the personal tax allowance for those with income over £100,000 per annum.

High earners may already be impacted by these changes and need to be aware of any additional tax charges that they may incur. This might include a tax charge not only on their own pension contributions but also on those paid by their employer on their behalf.

Further changes are proposed from April 2011 with the expectation that tax relief will be tapered away so that those with total taxable income over £180,000 will effectively only obtain relief at 20 percent, the basic rate of tax for the tax year 2009/10.

Even those individuals who are not immediately affected might want to consider maximising pension contributions while they can still qualify for higher rate tax relief.

The details of the changes, and the ways in which individuals might be affected, are complex and will vary from individual to individual. Mercer can work with companies and high earners in a variety of ways to prepare for these changes, minimise their impact, maximise opportunities and structure their finances effectively. A Mercer webcast entitled ‘The changing landscape for tax and higher earners – Implications for reward and benefits’ will be held on 3 November. Visit Mercer Webcasts  for more details or if you would like to discuss this issue in more detail, please contact your usual Mercer consultant.