McCarthy and Stone uses financial education to boost pension take-up

In 2010, retirement property developer McCarthy and Stone overhauled its pension scheme and provided financial education sessions to help employees manage their savings better.

McCarthy and Stone large

The revamp was driven by the fact that the group personal pension (GPP) scheme the employer had offered since the 1990s had not changed much since it was implemented. 

Its new scheme is a self-invested personal pension (Sipp) supplied by Hargreaves Lansdown as part of its Corporate Vantage platform, a flexible corporate wrap that allows staff to invest in a range of financial products, including the Sipp, and a stocks and shares-based group individual savings account (Isa).

Paula Jordan, HR director at McCarthy and Stone, says the new scheme enables staff to manage their own pension if they prefer not to adopt the default fund, which is managed by Schroders. 

A key objective of the project was to ensure staff could access a wide range of good-value funds, including ethical and low-cost funds.

However, 75% of employees have entered the default scheme.

Jordan was committed to ensuring that staff, whatever their fund preference, receive value for money.

“We wanted a good deal for our employees, so that they invested as much of their pension money as they could, rather than pay it away in fees,” she says. “We also wanted real transparency.”

Financial education

McCarthy and Stone development

As part of the project, McCarthy and Stone worked with Hargreaves Lansdown to create a financial education programme to promote the financial savings products available to its 900-strong workforce.

The programme started with a group financial education seminar about the pensions market and the corporate wrap scheme. This was followed up with one-to-one financial education sessions for pension scheme members.

“We didn’t initially offer that to non-members, but quite a lot of non-members wanted to come along, and as a result of that, our pension membership went up by 20% straight away,” says Jordan.

Membership of McCarthy and Stone’s pension scheme has risen by around 40% since the financial education sessions began.

“The word spread. A lot more staff began to realise that pensions were a good thing, and quite a few of them increased their personal contributions after having heard the presentations and having had the one-to-one and looked at the [online] benefits calculator,” says Jordan. “It’s been very successful in terms of increasing awareness, both among the pension scheme members and new members.”

The organisation has now run 32 seminars and 376 one-to-one sessions with staff since overhauling its pension scheme. 

Auto-enrolment preparation

McCarthy and Stone auto-enrolled all remaining staff into its pension scheme following its February 2014 staging date.

It is using a different pension scheme for auto-enrolment, also provided by Hargreaves Lansdown, for which it has set the standard contribution rates at 2% for employees and 1% for the employer, which will increase in line with statutory requirements.

McCarthy and Stone set these rates after discovering that its previous employee contribution rate of 5% was a barrier to employees joining the pension scheme.

“It will be interesting to see how many staff choose to increase their contribution from the auto-enrolment level,” says Jordan. 

The employer has been communicating to staff over recent months about the upcoming pension changes. It sent letters to all employees’ home addresses because of the nature of its workforce and the fact that not all staff have a dedicated email address or easy access to the employer’s intranet site. 

Job roles at McCarthy and Stone range from designers and engineers to builders, finance and sales staff, and the average age of its employees is currently 47.

McCarthy and Stone development countryside

As appropriate, it used emails, intranet site messages, messages in payslips, and set up an email helpline. 

“We’ve been using the intranet to say ‘two months to go’, ‘one month to go’, and so on,” says Jordan. “There has been quite a lot of interest because the media campaign is ramping up and staff are coming forward with questions.”

She says a number of staff have requested help to understand auto-enrolment.

“I think staff are waking up to the idea that the state pension is not enough,” she says. “They are suddenly realising what a low level the state pension will be, so they are starting to think about their retirement.”

This applies to employees of all ages, not just those approaching retirement.

“Interestingly, younger employees who have joined us recently are tending to go for the pension, whereas five years ago, they maybe wouldn’t have done,” says Jordan. “Generally, I think that’s because there’s a wider understanding and engagement with retirement planning.”

Increased take-up

Since McCarthy and Stone introduced financial education sessions and its new pension scheme, more than one-third of employees (33%) are making a contribution higher than the standard 5%. Before the transfer to the new scheme, 38% of employees were members, and now 49% have joined.

“We’ve had quite a lot of positive feedback,” says Jordan. “Thinking back to 2010 when we did the transfer, quite a lot of staff said they were glad they went to the presentations. For some staff, it was what they’d been thinking about already, but it definitely raised awareness and made them think that they need to plan for tomorrow, not just live for today.”

McCarthy and Stone at a glance

The retirement property developer has been in operation for more than 30 years. It has 900 employees and its head office is in Bournemouth.

The workforce ranges from construction workers to finance and sales staff.

Its two main products are retirement accommodation and assisted-living developments.

A key focus is to raise awareness about the services that organisations such as McCarthy and Stone can offer older people and their families.

Career history

HR director Paula Jordan joined McCarthy and Stone in 2008 and was appointed to the board in 2012.

As HR director, she is responsible for HR strategy and policy, while the board has responsibility for strategy and performance for the whole organisation.

“Reward and benefits have always been a part of my role,” says Jordan. “What really excites me about HR is helping, through the people strategy, to get the best possible results for the organisation, and helping staff to be the best version of themselves they can ever be.”

She adds that remuneration strategy is a part of her remit, but she likes the all-round nature of an HR generalist’s role.

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