As Sammons Pensions Recruitment publishes its 2020 Salary Survey, Sarah Bergin-McCarthy finds the current climate is not hampering regrowth.
Sammons Pensions Recruitment has published its 19th annual salary survey, which is based on research of the pensions industry, and looks at trends and opinions across salaries, bonuses, benefit packages and recruitment issues.
The UK recruitment backdrop
Let us begin by putting recruitment in the pensions industry into the broader UK-wide employment perspective. The Office for National Statistics' (ONS) Labour Force Survey estimates for August to October 2020 show there were 32.5 million people aged 16 years and over in employment, 280,000 fewer than a year earlier. This was the largest annual decrease since January to March 2010, 0.9 percentage points down on the same period in 2019 (1.9 points down for men, but 0.1 points up for women) and 0.5 points down when compared with the previous quarter (May to July 2020).
The Bank of England's decision maker panel for November 2020 echoes some of these findings - showing businesses' expectations that the employment rate would be 6% lower than it would have otherwise been in the three months to December 2020, a modest improvement compared with the 8% fall predicted in October 2020 and one that was likely related to the extension of the Coronavirus Job Retention Scheme and Self- Employment Income Support Scheme.
Despite this, many UK companies swiftly adapted to Covid-19 - implementing virtual recruitment, onboarding and remote working to ensure continuing business plans despite a turbulent market.
And the recruitment situation is rapidly improving - with permanent hiring in UK job roles up by 38% and in contract roles up by 42% in January 2021, according to figures by the Association of Professional Staffing Companies (APSCo), numbers which it said indicated the current climate "isn't hampering the regrowth from the pandemic". It adds that while year-on-year permanent vacancies were down 28%, the annual percentage fall is continuing to decrease (in December, the year-on-year drop stood at 32%) while contract vacancies were down by only 11% year-on-year - a 5% improvement on December.
And what of the future? 2021 onwards will, for many, be about achieving an optimum balance between office and home working, something which will also support diversity and inclusion initiatives. This is something that was picked up in Deloitte's fourth quarter UK chief financial officer (CFO) survey, which found that CFOs expected levels of homeworking to rise fivefold by 2025.
Looking at pay specifically, Willis Towers Watson's salary planning report for the fourth quarter of last year found 33% of private sector companies chose to freeze pay increases. However, in 2021, this number is expected to significantly fall to just over 3% of companies.
According to new research by Universum the expectations of salary between men and women had over a 25% gap. In 2018, this gap stood at 13 per cent. This disparity has been particularly shaped by the Covid-19 pandemic as, interestingly, men's expectations for salaries has risen whilst women's have fallen. Previously, in 2019, men's salary expectations were £40,500 on average and women's were £31,400. The report also found that men sought recognition in the workplace and women preferred job security. It stated that "men were drawn to challenging work and increased recognition" and women "preferred companies with better job security, leaders who will support their development and continued education opportunities". The priorities of employees also varied significantly by regional locations within the UK.
Pensions recruitment
Following a brief pause in recruitment activity between March and May 2020, the pensions industry has continued to be busy in terms of recruitment across all sectors. It continues to be a candidate-driven market where opportunity, benefits packages, flexibility and a nimble recruitment process are essential to attract and retain talented individuals.
Staff are increasingly confident about making a career move and - despite the challenges posed by Covid-19 - more than 14% of respondents have changed jobs in the past 12 months. This compares to 20% in 2019, 22% in 2018, 20% in 2017 and 18% in 2016.
The key motivation for changing role is finding a new challenge, closely followed by salary - something that reflects the past few years' salary stagnation and lack of market movement.
Indeed, while 38% of respondents to the salary survey reported a 2% to 2.9% pay rise in 2020, 22% said they did not receive a pay rise at all. A full 23% of respondents felt their salary was not currently in line with the market.
When it comes to the benefits values most highly among respondents, the key trend over the past five years has been flexibility and the ability to buy or sell holidays. In the latest survey, holiday has also featured highly, along with benefits such as income protection, critical illness cover and private medical insurance - health and wellbeing benefits that reflect the hugely challenging time 2020 was. But benefits packages require regular review to remain relevant - and the massive changes faced by UK workers in 2020 and beyond will surely have considerable influence on offerings going forward.
The survey also found employers could be more transparent with salary information - with respondents reporting there was a "culture of salary secrecy" and "little or no external transparency" at their organisation and that the process followed often seemed "very unclear and non-scientific".
This comes at a time where there is an increased focus on pay equality, particularly when it comes to gender-based differences. ONS data show the gender pay gap had fallen from 9% in April 2019 to 7.4% in April 2020 for full-time employees but, as Rest Less' analysis of the data shows, there is still a big difference, with older workers facing the widest pay gap.
A more open and transparent approach to compensation can surely go a long way toward building a culture more resistant to discrimination.
Taking a look at the main issues encountered when recruiting, the shortage of suitably experienced candidates presented is the key issue reported every year. In the 2020 survey, candidate salary expectations, counter offers, and business constraints closely followed this. Strategies applied to overcome these included nearly 33% recruiting on potential and investing in training.
Counteroffers have been particularly aggressive over the past 12 months, in part due to constraints on or indefinite complete pay review freezes. With the increasing level of opportunities in the industry, candidates can consider typically more than one opportunity to ensure that they move for the right career opportunity.
Industry challenges
Sammons' salary survey also asked respondents what were the main challenges facing the industry.
The key issues raised included, perhaps unsurprisingly, Covid-19 and the fallout from the pandemic. Respondents raised their concerns over the quality of administration services in a remote working environment as well as the impact such remote working was having on employee wellbeing. Those replying to the survey also questioned the ability of businesses to form cohesive well-trained teams with newer recruits given the lack of the office environment and the expectation that we will be going into offices much less frequently in future. As one respondent said: "Working at home is not a good option for young apprentices living with their parents."
Others riffed on a similar vein on Covid-19 - saying the coronavirus has and should redefine the way we work - noting the phrase ‘back to normal' should be banned as increased working from home would now be the new normal. But they said that employers need to take the lead in keeping their employees happy and productive - saying that, while this has happened, it often seems to have been in a reactive way, adding that proactive planning for how things will be seems to be taking longer to evolve.
Many respondents also commented on workload, resources and morale - with one commenting on the sheer volume of administration in relation to the headcount available. Others added to this, saying continued fee pressure from clients for the provision of admin services was resulting in ever greater constraints on resources.
Some respondents felt there was currently low morale among employees who were "highly stressed and see little benefit staying in the industry if they don't have career ambitions". Automation within third-party administrators was another resource issue raised, with respondents saying this was leading to a loss of skills and fewer people having a detailed understanding of legislation and wider pensions knowledge.
Allied to this, respondents also commented on the weight of legislative changes coming through in addition to the challenges of GMP equalisation, McCloud and climate change - pointing out the growing workload associated with increasing regulation as well as the lack of funds to support such large projects. They also discussed The Pensions Regulator's drive for consolidation as well as the "technical skills shortage" within the industry.
Respondents to Sammons' survey also cited technological advancement as a challenge as well as ensuring schemes have accurate data to enable automation for online servicing. Cyber security, fraud and scams were also noted as issues, as was diversity in senior positions within the industry.
Conclusion
The pensions industry continues to face much challenge and change, not least considering the impact of the Pension Schemes Act 2021. As a recruiter to the pensions industry we continue to see increasing demand for skilled pensions professionals, at all levels, across the UK. Employers need to continue their focus on increasing productivity through investment, innovation, management quality, upskilling of employees to ensure competitive, productive and engaged, and ensuring robust, nimble and effective recruitment processes in place to secure future talent.
Sarah Bergin-McCarthy is managing director of Sammons Pensions Recruitment
Read more about Sammons' salary survey at: https://sammons.co.uk/pensions-annual-salary-survey
