Ant Donaldson: High employer pension contribution leads to engagement

I respond to Richard Fleet’s description of auto-enrolment contributions as “a payroll tax” in your September letters page and that an employer contributing above the minimum “is putting itself at a competitive disadvantage”.

At E.On, we believe it’s important to help employees to retire comfortably. Consequently, we auto-enrolled all of our pension scheme non-members at 6% employer contributions and 3% from the employee, irrespective of their age or earnings. Our rationale included fairness between existing scheme members and non-members, and simplifying administration, so we could focus on good pension outcomes.

The results speak for themselves. More than 92% of our workforce are now pension scheme members, up 27% in a year. Feedback from employees has been overwhelmingly positive. The vast majority understand the value of retirement savings following our awareness campaign and value the approach we’ve taken. And almost half the people who opted out told us they expect to join the pension scheme in the foreseeable future.

The icing on the cake is that our most recent engagement survey showed pensions and benefits as the top driver of satisfaction with E.On as an employer. That should translate into engagement, retention and customer satisfaction, so we are convinced that our ongoing investment into employees’ pensions is worthwhile to the business.

Ant Donaldson is senior specialist – employee benefits at E.On