Construction firm Knight Harwood’s group personal pension scheme started with a contribution basis of 3% and 3% and introduced the concept of auto-escalation, through what it calls the Pension Increase Pledge (Pip). This gives members the option to commit to increase their pension savings by 1% each year for a maximum of seven years.
John Knight, the organisation’s managing director, says: “As a responsible employer, Knight Harwood has always been committed to providing a quality pension scheme for our staff and that is why we supported the concept of auto-escalation through what we call the Pension Increase Pledge.”
The increase takes place on the scheme’s anniversary of 1 March. It applies to members who have opted for Pip and have been members of the scheme for six months. Contributions above 3% qualify for national insurance rebates, so this applies to all Pip increases. Members can opt out of Pip at any time.
Having established the rules at the outset, the scheme has found auto-escalation relatively straightforward to administer. Knight Harwood was a start-up business and when the scheme was introduced it only had nine employees, all of whom joined the scheme, with seven opting for the Pip. Of these, five have completed the full increase programme, one stopped the increase once their contributions reached 6% and the other has left the firm.
Over the years, a number of other employees have completed the full pledge and many more are part way through.
