Such arrangements can be particularly effective for employers that have a diverse workforce.
Gary Moore, policy adviser, defined contribution (DC) pensions at the National Association of Pension Funds, said: “It may be that there are different segments [of a scheme] for different parts of a workforce, that different segments have different default funds, or are available after a certain length of service. It is important that different communications emphasise that research has been done into the membership of those sections.”
Offering different tiers of pension provision within a plan, or differing pension schemes, can also be used to incentivise employees to opt into an existing scheme voluntarily ahead of being auto-enrolled.
GeoPost UK is encouraging staff that are not members of its group personal pension (GPP) plan to enrol before its auto-enrolment staging date of 1 August. From that date, it will auto-enrol all staff that are not pension scheme members into a plan provided by B&CE’s The People’s Pension.
Its new scheme will have lower contribution levels, which GeoPost is now communicating to staff. Under the GPP, employees receive matched contributions up to a maximum of 8%, as well as life assurance. But staff who are auto-enrolled into the new scheme will receive an employer contribution of only 1% with no life assurance benefits.
Dairy Crest, which auto-enrolled its staff in April, added a new section to its stakeholder pension scheme for staff who were not previously members. About 40% of its employees were already members of the existing scheme, provided by Zurich Life UK, which matches employee contributions at 1.25% for every 1% staff put in, up to a maximum of 10%. But those in the new section of the scheme will receive only the minimum 1% employer contribution required under auto-enrolment legislation.
