EXCLUSIVE: Siemens UK has seen take-up in its pension scheme rise to 98% since its auto-enrolment staging date.
Around 1,000 of Siemens UK’s 13,000 employees were not in its trust-based defined contribution (DC) pension before its auto-enrolment staging date of 1 May.
The technology business started communicating auto-enrolment to employees during its flexible benefits enrolment window in November 2012. It emailed its 1,000 non-pension members to tell them that auto-enrolment was coming, and offered them the opportunity to opt in early.
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Nikki Roche, reward partner at Siemens UK, said: “We had 20% of that population voluntarily join in November and increase their contribution rate up to 10%. In May, it was just a mop up. We have been really pleased with the result.”
On 1 May, the organisation auto-enrolled 735 employees (65 were not eligible due to earnings levels or age), 160 of whom chose to opt out.
The scheme, which is managed in-house and run by trustees, requires a minimum 3% contribution rate from employees, which Siemens matches by up to 10%.
Roche added: “When we auto-enrolled people, we defaulted them in at 3% and they can adjust it during the flexible benefits enrolment window.”
Preparing for auto-enrolment
Siemens UK began to prepare for auto-enrolment in November 2011 by identifying its different populations of employees, specifically looking at its short-term workers, casual staff and apprentices.
“We were looking at our different groups and considering the various options of how we could deal with their pensions,” said Roche. “We wanted to offer them all the same benefit level, so even if we had decided to use a different pension, we would have still mirrored the rates.
“We didn’t have a desire to offer a lower contribution level to different groups of people because, as an organisation, we’re quite passionate about pensions and we’re quite strong on encouraging people to prepare for their future.”
More than a cost exercise
Siemens UK did not want to look at auto-enrolment as a cost exercise. It already had high take-up levels, with 92% of its employees in the DC pension before auto-enrolment. Roche added: “The financial implications were always seen as the smallest part of the project. It was more about the process and how we would physically comply.”
To comply with the legislation and to ensure its short-term population was taken care of, Siemens UK made a few tweaks to its existing pension schemes rules. For example, the scheme used to have a three-month waiting period before pension contributions were invested in an individual’s account.
“If the employee left after three months, they would lose it,” said Roche. “It was always a risk to our short-term workers. From day one now, the money goes into their personal account.”
Auto-enrolment communications included letters and leaflets to Siemens UK’s offline population. It also used its dedicated auto-enrolment intranet site, which links through to the Department for Work and Pensions’ (DWP) information and tools. “We wanted to communicate that this was a government initiative,” added Roche. “We wanted to be clear so people understood the link with the DWP’s adverts and posters.”
Roche said that preparing for auto-enrolment took the organisation 18 months, hence why she advises other employers to start planning as early as possible. “Planning ahead was a good idea and it was definitely the right thing to do,” she added.
“Overall, it meant that the go-live went without a hitch. We got the kind of take-up rates we would have hoped to get. The enhanced communications and allowing employees to engage through flexible benefits really helped with that.”