E on News Update: E on Raise Pension Take up
E on News Update: E on have upped their pension take up rate to 92% in light of the recent auto-enrolment scheme proposed by he government.
Energy company Eon have increased their take up of the Group Personal Pension (GPP) plan to 92%. The company started the auto-enrolment scheme approximately 18 months ago following the instigation of new laws regarding pension schemes in the UK.
‘The utilities business decided to postpone its staging date by one month to 1 April 2013 to coincide with its flexible benefits annual enrolment window.
Since it began communicating during its 2012 flex enrolment, the employer has seen a 27% rise in pensions take up.
Ant Donaldson, senior specialist, employee benefits at E.On, said: “We rapidly came to the view of fairness and consistency. We wanted to make sure everyone had access to the same scheme they had had in the past.”
The GPP, which is provided by Fidelity, requires a minimum 3% contribution by employees to which the employer matches at a rate of 1:2. Employees can choose to increase contributions through the organisation’s flexible benefits scheme, with a maximum employer contribution of 12%.
At its staging date, 3,224 employees were auto-enrolled into the GPP at the lowest contribution level.
Chris Osborne, pensions policy manager at E.On, said: “We decided to auto-enrol all our employees into our existing plan [and] give employees access to the contribution structure that had applied historically to all our employees. We didn’t see this as an opportunity to reduce those contribution rates. We wanted to treat people fairly.”
E.On also wanted to focus on its pension members’ outcomes. Osborne added: “Our focus should be on using our budget to give the best contributions we can, rather than spending huge amounts of money on expensive systems changes.”
As a result, the organisation opted to deliver its auto-enrolment process through its online flexible benefits portal, which is provided by Benefex.
“We were originally hoping we would end up with between 90% and 95% of employees being pension scheme members at the end of the process,” said Donaldson. “We have ended up with 92%.”
E.On conducted a survey among its opt-out population following its staging date. The findings include:
75% are lower earners (less than £20,000 salary).
58% are under 35, with a relatively even split between men and women.
45% have less than five years’ service and 45% have five to 10 years’ service
79% work full time.
92% found the process easy or very easy (and only 2% found it very difficult).
81% thought the communications were clear or very clear (and only 4% found them very confusing).
45% gave their reason for opting out as being unable to afford the contributions.
44% said they would join the pension scheme in the future, 24% during the 2014 flexible benefits enrolment and 20% when everyone is auto-enrolled again in three years’ time.
42% said pensions are not for them and never expect to join the scheme.
“For the ones who opted out, affordability was the key reason given,” said Donaldson. “At the end of the day, that survey told us that only about 40% of the people who opted out really don’t think pension saving is for them.
“In an ideal world, we would have wanted [pension scheme membership] to be a little higher. But we started this process with two-thirds of employees already active members of our pension scheme. Now we’re at 92% and we are looking to increase that in the future.”’
For more information regarding the products and services offered by e on visit the e on website or contact them directly via the e on phone number. This article was originally sourced from www.employeebenefits.co.uk.
5,185 total views, 5 views today