Our panel of City economists considers that while inflation is unlikely to rise in the short term, it is likely to remain at or above 3% over the coming 18 months. The prospects for inflation are probably best summarised in the Bank of England’s recent Inflation Report, released on 10 May. It said: ‘Conditional on market interest rates, domestic inflationary pressures are projected to build over the forecast period while the contribution from energy and import prices dissipates.’
Pay growth looks to be picking up again, as shown by our own data on pay settlements, official figures on average earnings, and reports from the Bank of England’s agents. IDR’s monitoring indicates that the proportion of deals worth 3% or more is rising.
Continue reading Viewpoint – It’s time to think more strategically on pay
Saga has made changes to its defined-benefit pension scheme to contain costs and tackle the scheme’s deficit while keeping it open to both existing and new members for the long term. The company has also improved the terms of its group personal pension. These changes have been informed by the company’s strategy of helping customers and employees lead better lives in retirement. At the same time, the company has facilitated access to other financial products to support staff in managing savings priorities and is helping staff to make more informed decisions when it comes to saving for the future.
THE NEED FOR CHANGE
Saga is a provider of holidays, financial products and care services aimed at the over-50s. The company, which has more than 4,000 staff in the UK, has long offered a defined-benefit (DB) scheme, the Saga Pension Scheme (SPS), to all its permanent employees and just under half (48%) of the workforce are members. It applies its strategy, of helping people to ‘lead better lives in retirement’, to its employees as well as its customers and regards its pension provision as integral to this. The company also considers a DB pension scheme to be an attractive proposition in recruiting and retaining staff when many other companies are closing theirs.
However, in the two years from January 2014 to January 2016 the actuarial valuation of the DB scheme deficit – the gap between the value of investments and what it has to pay out in current and future benefits – had increased from £15.6 million to a forecast £50 million, while the total cost of future benefits had risen from 18.6% to over 30% of pensionable salaries. Saga therefore had to consider whether it could afford to keep the defined benefit scheme open.
The median pay increase across the economy remains at 2.5% in the three months to the end of April 2018, according to the latest monitored figures from IDR. The proportion of higher awards at or above 3% has increased with these awards accounting for almost a third of all the awards monitored in this period. This compares to just under a quarter of awards recorded at this level in our look at the figures in the three months to the end of January.
For the third consecutive month the median pay award across the whole economy remains at 2.5%, according to our latest analysis. This trend, monitored for the three months to the end of March 2018, is also evident in the private sector with the median remaining at 2.5%. A consistent median of 2.0% has also been seen within the not-for-profit sector.
Continue reading Pay reviews – March remains at 2.5%
The NHS pay offer is a significant deal that signals the end of the 1% cap on public sector pay rises and as such includes genuine improvements for existing staff. However it also involves future changes that may be less welcome for some. Under the proposed deal, headline rises for those at the tops of their bands are accompanied by changes to the pay structure which mean that staff who have not yet reached the tops of their pay bands would receive significantly higher earnings increases – via progression pay – over the course of the three-year deal. But from 2020 progression for new employees would be more limited than currently. Continue reading Proposed NHS pay deal: swings now, roundabouts later?
Bonuses remain an integral – albeit discretionary – element of the reward package on offer at many employers, particularly within the private sector: according to the ONS, the combined value of all bonuses paid in Great Britain reached a record level of £46.4 billion in 2016/17. Our recent survey of 30 mostly large employers across the manufacturing and primary sectors and private sector services looks at the design and typical payout levels of 41 bonus schemes – from comparatively simple all-employee schemes to more complex arrangements covering senior managers (eg Board members or executive team members).
The median pay award for the three months to February 2018 remained at 2.5% across the whole economy, with the private sector median also holding steady at 2.5%.
We are pleased to announce that Incomes Data Research has today accredited as a Living Wage Employer.
Our Living Wage commitment will see everyone working at IDR, regardless of whether they are direct employees or third-party contracted staff, receive a minimum hourly wage of £8.75 in the UK or £10.20 in London.
The Living Wage is estimated to be the level of hourly pay necessary for a minimum socially acceptable standard of living. It is voluntary and separate to the statutory National Living Wage, which for over 25s is currently £7.50 per hour.
Inflation is likely to only slowly abate over the coming year, according to the latest predictions from City economists. One of our panel of economic forecasters sees RPI inflation remaining at similar levels for most of the coming year, and another thinks it will rise a little before coming down later in 2018. Continue reading Forecasts indicate gradual drop in inflation levels