The sticky subject of pensions has attracted a lot of media coverage in recent weeks, after an independent report by Lord Hutton called for reform of the way the government has run its pension schemes.
Many government pension schemes are multi-employer schemes, with many charity employees as members. The report's recommendations will improve life for charity employers in those schemes, but most of them will still face rising costs and high risks.
The Pensions Trust, which also operates multi-employer schemes open only to charities, is trying to improve the sector's awareness of those risks, says Sarah Smart, chair of the trust's board. "Too often, warnings fall on deaf ears until there's a problem," she says. "Next month we're running an event with the Institute of Chartered Accountants in Scotland to make charities aware of what's involved in a multi-employer scheme."
In particular, charities need to consider the impact of new laws that will make it compulsory for all organisations to offer pension schemes from 2012, Smart says. Many organisations' pension schemes have low employee membership and a rapid increase in enrolment could make current provision unaffordable.
Another issue is the vulnerability of trustees of unincorporated organisations, who could face large personal bills if their charity folds when it still owes money to a pension plan. "I would not want to be the trustee of an unincorporated organisation with a defined-benefit pension scheme, because it is an extremely high risk," says Smart. "Trustees can be personally sued, and for a lot of money. It has already happened to the trustee of Hirwaun YMCA in Wales, and it could happen to others.
"In my role as trustee of the pension fund, I would be very reluctant to sue a trustee personally. But I am also personally liable for these funds - so if it came to it, I might have little choice."
Smart plans to write to the Pensions Regulator to ask for more support for multi-employer schemes. It has a history, she says, of not stepping in to pursue employers who avoid their obligations under multi-employer schemes, in which the cost of any default is born by other employers rather than the Pension Protection Fund. "We feel the regulator doesn't provide as much support for multi-employer schemes as for individual schemes," she says.