In October 2015, food and retail business Co-op closed its defined benefit (DB) pensions arrangement and transferred employees out to a defined contribution (DC) group personal pension (GPP) scheme.
During the change, the existing £8 billion DB scheme stayed as was, with all existing accruals retained. In terms of future pension savings, Co-op employees were able to join a trust-based DC scheme that was created.
For Co-op, this move acknowledged the pace in which the world of work was changing in terms of flexibility and career transitions; the old scheme, which was introduced in 2006, was no longer felt to align with an increasingly dynamic workforce. Co-op recognised that if employees change jobs five to six times in their career, this needed to be reflected in their pension scheme.
Russ Brady, head of group public relations at Co-op, says: “This realisation initiated transferring out of their current DB to a much more flexible and less structured DC scheme, where employees are now able to drive their own funds and take more responsibility around how much they contribute, regardless of whether they stay working within Co-op group.”
Everyone who works for Co-op can join the DC scheme, and new starters are automatically enrolled. To ensure the process ran smoothly for individuals as well as the wider business, the organisation provided factsheets, member guides, and video tutorials to support employees in understanding all areas of joining the DC pension scheme.
Since making the transfer to the DC scheme, Brady reports that employees at Co-op have highly rated their pension benefits, which are seen positively alongside its health and wellbeing benefits and financial wellness strategies. The employer tracked employees’ reactions towards the pension transfer through its employee survey.