Scottish Power’s UK pensions manager, Anne Harris, is keen to keep up with advances in pension technology to ensure that employees’ retirement plans are on track. She says: “Pensions are becoming more and more complicated, so employees are becoming switched off.
“It’s vital that our stakeholder pension scheme members are saving enough for their retirement, so we’re using technology to deliver something that’s very simple.
“Members don’t want to know the complexity [behind the technology], they just want to know whether they’re on target or not [for achieving their desired income in retirement].”
The energy group uses Hymans Robertson’s Guided Outcomes technology to support the 2,600 members in its stakeholder pension scheme, which is invested by Fidelity International, and which runs alongside two existing defined benefit (DB) pension schemes. Of the employer’s 6,500-strong UK workforce, just 200 members are not covered by any of its three pension schemes.
Stakeholder scheme members can use a modelling tool, which is based on a red, amber and green traffic-light system, to check that they are on track to achieve their desired income in retirement. If not, they see an amber or red status symbol and are guided to take actions that would get their plan back on track, such as increase their scheme contribution rate.
Employees in the stakeholder plan are typically allowed to contribute 3%, 4% or 5% and Scottish Power will match these rates up to a maximum of 10%. But to support employees using the technology, Scottish Power is allowing employees to increase their contribution rate by just 2% each year until they achieve a green status, which means that their retirement plan is on track.