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11 Feb 2016
by Anna Scott

REBA New Year Lectures: Reward directors can't define their own destiny

The uncertainty the reward profession faced in 2015 is set to continue this year due to the “overwhelming burden of legislation”, FirstGroup’s reward and pensions director told the audience at the REBA New Year Lectures.

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“The context of 2015 was not that positive,” John Chilman said at the event, which had the theme of 2016 Disrupters. “I wasn’t able to define my own destiny. I was responding to issues and thinking on my feet.”

Chilman said that the profession can expect more legislation this year, adding that his company’s reward agenda for 2016 is not being written until 18 March – the day of the Budget.

Despite the uncertainty regarding regulations, pensions taxation change is expected to be “the tail that wags the dog” in the Budget, Chilman added.

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Already the government has consulted on changes to legislation relating to the abolition of contracting-out of salary-related pension schemes, and on the possible introduction of a so-called taxed, exempt, exempt (TEE) model for pensions, which will see pension contributions taxed as income but exempt from tax on growth and again when pensions are withdrawn.

This could replace the current EET tax system, in which contributions to pensions are exempt from income tax and from taxes on growth, but taxed when their pensions are withdrawn.

“If pensions are going to be about saving for retirement then I’m not sure that’s the best way,” Chilman said, adding that regulations on gender pay reporting and the National Living Wage will also guide reward strategies in 2016.

The reward profession should also embrace technology this year to make benefits more personalised and targeted, Chilman said. This will “generate better managing information and enable us to have a better understanding of our colleagues”.

“Total reward will become much bigger this year and technology is a huge enabler of that,” he added.

Slides of REBA New Year Lectures 2016 presentations can be found here

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