E.On raises pensions take up to 92% after auto-enrolment

EXCLUSIVE: E.On has increased the take up of its group personal pension (GPP) plan to 92% after a year of communicating auto-enrolment.

The auto-enrolment process began for the utility business about 18 months ago, when it looked at the options it had around complying with the legislation.

The utilities business decided to postpone its staging date by one month to 1 April 2013 to coincide with its flexible benefits annual enrolment window.

Since it began communicating during its 2012 flex enrolment, the employer has seen a 27% rise in pensions take up.

Ant Donaldson, senior specialist, employee benefits at E.On, said: “We rapidly came to the view of fairness and consistency. We wanted to make sure everyone had access to the same scheme they had had in the past.”

The scheme

The GPP, which is provided by Fidelity, requires a minimum 3% contribution by employees to which the employer matches at a rate of 1:2. Employees can choose to increase contributions through the organisation’s flexible benefits scheme, with a maximum employer contribution of 12%.

At its staging date, 3,224 employees were auto-enrolled into the GPP at the lowest contribution level.

Chris Osborne, pensions policy manager at E.On, said: “We decided to auto-enrol all our employees into our existing plan [and] give employees access to the contribution structure that had applied historically to all our employees. We didn’t see this as an opportunity to reduce those contribution rates. We wanted to treat people fairly.”

E.On also wanted to focus on its pension members’ outcomes. Osborne added: “Our focus should be on using our budget to give the best contributions we can, rather than spending huge amounts of money on expensive systems changes.”

As a result, the organisation opted to deliver its auto-enrolment process through its online flexible benefits portal, which is provided by Benefex.


E.On’s communications campaign began in April 2012 with formal letters sent out to all employees. Pension members received emails reassuring them that the scheme they were already in was compliant with the legislation, while non-members received emails extolling the virtues of pension membership.

“We tried to do that in an imaginative way,” said Donaldson. “We sent out scratch cards, which showed the percentage matches. We also said they could join early. About 750 people opted to join pre auto-enrolment.”

A second phase of communications began in the autumn with a series of messages explaining the positive attributes of pension scheme membership. Donaldson added: “We put in place a video quiz in early December, whereby [employees] had to understand the key messages in order to answer the quiz effectively.

“About 2,500 logged onto this. The top prize was £1,000 in Christmas pay. Another 250 or so decided to join at that stage.”

In February 2013, E.On sent out auto-enrolment packs to deliver targeted information to pension scheme members and non-members. At staging, on 1 April 2013, it sent out further letters and encouraged employees to log into the flexible benefits system and make selections around the scheme.

Opt-out rates

We were originally hoping we would end up with between 90% and 95% of employees being pension scheme members at the end of the process,” said Donaldson. “We have ended up with 92%.”

E.On conducted a survey among its opt-out population following its staging date. The findings include:

  • 75% are lower earners (less than £20,000 salary).
  • 58% are under 35, with a relatively even split between men and women.
  • 45% have less than five years’ service and 45% have five to 10 years’ service
  • 79% work full time.
  • 92% found the process easy or very easy (and only 2% found it very difficult).
  • 81% thought the communications were clear or very clear (and only 4% found them very confusing).
  • 45% gave their reason for opting out as being unable to afford the contributions.
  • 44% said they would join the pension scheme in the future, 24% during the 2014 flexible benefits enrolment and 20% when everyone is auto-enrolled again in three years’ time.
  • 42% said pensions are not for them and never expect to join the scheme.

“For the ones who opted out, affordability was the key reason given,” said Donaldson. “At the end of the day, that survey told us that only about 40% of the people who opted out really don’t think pension saving is for them.

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“In an ideal world, we would have wanted [pension scheme membership] to be a little higher. But we started this process with two-thirds of employees already active members of our pension scheme. Now we’re at 92% and we are looking to increase that in the future.”

E.On auto-enrolment in numbers

  • 856 employees opted out of the pension scheme after being auto-enrolled.
  • Almost 190 new members chose rates above the 3% minimum employee contribution.
  • 383 existing members increased their contributions through the flexible benefits scheme.
  • 98% of all pension scheme members use a salary sacrifice arrangement.
  • Active pension membership increased by 2,368 to 5,029 in April 2013.