When engineering firm Arup set up a new group personal pension (GPP) plan last June, it decided to offer a matched contribution to staff.
The matches on offer range from a minimum 2% employee contribution which attracts 4% from the employer, up to a maximum 6% employee contribution which attracts a 12% employer contribution.
Of the firm’s 3,000 staff, 93% have taken up the benefit, with 83% on the maximum contribution level.
This contrasts with Arup’s previous trust-based scheme, which offered a choice of defined benefit (DB) or defined contribution (DC) provision and achieved a take-up of just 63%, with most people opting for DB.
Despite the high take-up, group pensions manager Rosemary Mounce says Arup will be affected by auto-enrolment. “For a majority, it is just a process that will bring in the 7% that have not joined. But there is another quite significant group - some on quite decent salaries - who are on a fixed-term or consultancy basis and will be brought in for the first time.”
Discussions are currently taking place to decide whether this group should be included in the existing scheme,
whether a new lower-level scheme should be set up for them, or whether they could be accommodated through
the national employment savings trust (Nest).
Mounce explains: “We are not expecting existing scheme contributions to be levelled down, although there is always the question of affordability.”
The firm’s existing scheme will also have to be adapted to remove the lowest permitted contribution level, which will fall below the statutory minimum. Mounce says Arup will probably wait until the last moment to do this.
“There may be people who genuinely cannot afford more, and we do not want to frighten them off before we
have to,” she explains.
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