Charities under pressure from increased pension burdens

The organisation’s 2008 Charity Pension Maze said pensions remain a significant area of risk management for charities, and investigated valuation and governance issues.

The report – conducted in association with Barclays – said continued legislative and regulatory changes had put new and increased burdens on charity trustees.

CFDG chief executive officer Keith Hickey said: "Pressure is mounting on UK charities – the number, range, and complexity of pensions issues they are facing is consistently increasing and the risks are getting higher.

"It is essential that charities take action now to ensure the long-term health and viability of the sector and we hope this publication guides them through their decisions."

Barclays director of public policy and sustainability Christine Farnish said the guide would help trustees "navigate their way through what can, at times, feel like a regulatory jungle".

She said: "Charities need to understand and manage a number of complex legislative and regulatory challenges on pensions."

The report said: "The covenants of charities are now a key issue that pension scheme trustees have to look at when they decide on recovery periods for funding any prior service deficits. Charity trustees should be aware of this change when they are setting their own strategic and investment priorities.

"There also seem to be some difficult potential conflicts, which could have fundraising or reputational implications which trustees will now need to balance.

"How much of their charitable funds or donations should be allocated to fund pensions? To what extent should charitable assets be pledged, as contingent assets, to improve the security of their pension scheme?

"By their very nature, pensions are a long-term matter of concern for charities and, as such, they need a measured response."