Deloitte has seen pensions as a key tool in attracting and retaining talent since auto-enrolment was introduced in 2012, says Anthony Kemp, the firm’s pensions and benefits director. “We’ve never seen the pension scheme as a statutory minimum benefit,” he says.
A recent focus has been to use the outcome targets devised by Pensions UK, formerly the Pensions and Lifetime Savings Association, to assess whether employees are saving enough to be able to afford a comfortable retirement. “We wanted to know if our scheme would get people to those outcomes and set ourselves a target of hitting those or doing better,” Kemp explains.
The exercise revealed that its employees would need to be contributing around 15% of salary to meet the outcomes.
The next stage was to assess its contribution levels. The organisation defaults people into the scheme at 4.5% of salary and matches this itself, which it continues to do up to 8%.
Those paying in via salary sacrifice also receive an additional 5% of their contribution from Deloitte, which could take the total employer contribution to 8.4%. Employees can also pay in extra through additional voluntary contributions, which also attract the additional 5% from the employer.
The exercise concluded that those paying in at the maximum level were likely to outperform the target, but those on the default would be short. Deloitte has since targeted these employees to encourage them to pay more, using terms such as ‘future benefits’ or ’salary tomorrow’ rather than pension or annuity. “We want people to be able to retire at the right time for them rather than feeling obliged to work,” says Kemp.
Ensuring employees understand the benefits they can get from the pension scheme is vital, adds Kemp. “When someone starts, we put on a welcome day with a video that explains what the pension does and how it works,” he says.
Deloitte also has a staff website with tailored content around savings and pensions, aimed at different demographic groups.
The fact that 92% of employees are enrolled in the scheme shows how valued it is. “It’s still the main retention and retraction tool in the benefit package,” says Kemp.
