EXCLUSIVE: SAP is to outsource its employee benefits system to enable it to cope with its pensions auto-enrolment duties.
The technology organisation, which will reach its staging date in September 2013, made the decison to switch from an in-house benefits system to one provided by Capita Employee Benefits, following its annual flexible benefits enrolment process in April.
Neil Hopkinson, total rewards partner at SAP, said the organisation decided to outsource its benefits system because of the strain of auto-enrolment.
He added: “The current system is an in-house system, but it did not have any capability to cope with pensions auto-enrolment.
“Following the new system going live in September, we will then bolt on our auto-enrolment system in October.”
The organisation will use its existing group personal pension (GPP) plan for auto-enrolment because it is compliant with the legislation.
The organisation currently offers all employees 8.75% of annual basic salary in pension contributions, while employees must put in a minimum 5% contribution.
However, SAP is still deciding what contribution levels to offer to its auto-enrolled employees.
Hopkinson added: “Given the people who are going to be automatically-enrolled, is it fair to ask them to contribute 5% when the legal limit is less?
“That’s the debate we’re having. Is that the right thing or should we offer a lower employer contribution, which is more aligned to the legal minimum?”
SAP currently has 86% take-up of its pension. It will auto-enrol the remaining 200 of its 1,400 employees in September.
From this group, Hopkinson expects an opt-out rate of between 10% and 15%.
The organisation began to its auto-enrolment communications as part of its annual flexible benefits enrolment, using emails and employee presentations.
Hopkinson said: “The initial auto-enrolment communications formed only 5% of our communications during annual enrolment.”
SAP intends to launch a bigger and more focused communications strategy around auto-enrolment from August.