Exemption is not enough

When the Government’s national scheme of Personal Accounts is launched in 2012, every employer in the UK will be affected, from the largest corporation to the small corner shop owner. There will be no place to hide, so it’s important that employers start to prepare now.

But it’s worth taking a moment to think about the many employers in the UK who already offer a good quality staff pension and the factors motivating them to do so. For most employers, the staff pension is part of a wider benefits package, designed to help recruit and retain good quality workers within their organisation. The pension scheme can be tailored, particularly in terms of the contribution structure offered, to suit the needs of the employer, their workforce and the industry in which they operate. The same can’t be said for Personal Accounts which will offer the same deal for everyone.

So with that in mind, it’s likely that many of the employers with an existing pension arrangement will aim to meet the Government’s exemption criteria so they can avoid auto-enrolling their employees into Personal Accounts.

But is simply achieving exemption enough? If we accept that the staff pension is an effective recruitment and retention tool then surely these employers should be aiming to strengthen their existing pension covenant in as many ways as possible in order to position themselves as an employer of choice.

There’s no doubt that communication is key to the success of a staff pension plan. After all, employees will only join if they understand and value the benefit provided. However, research suggests that communication is an area which many employers find difficult. The Benefits Research carried out by Employee Benefits Magazine in 2007 found that 63% of employers struggle to communicate their benefits package effectively to their staff. So it’s important that these employers act now if they are to effectively “future proof” their staff pension before 2012.

Communication doesn’t have to be a problem area for employers – most employers will already have wellestablished methods of communicating with their staff about a range of subjects. And a good pension communication strategy should aim to make best use of these. So whether it be a staff intranet or newsletter or something more novel, such as a company radio station, consideration should be given to how these media can be used to effectively promote the pension and other parts of the employee benefits package.

Personalisation of communications can also be an effective way to engage staff in the pension arrangement. Many pension providers offer online pension calculators which allow employees to key in their details and see how much they’ll have to save to achieve the pension they want at retirement. Similarly, examples in paper-based communications can also be tailored to suit the salary structure and age range of the target audience.

Some employers fall into the trap of establishing good communications at the outset of their staff pension plan but then fail to carry that on throughout the life of their plan. Lifetime communications are important for pension members and non-members alike. Members should be encouraged to regularly review the amount they are saving and think about increasing their contributions if they can afford to. Non-members should be reminded about the benefits they are
missing out on and given a chance to reconsider.

So the question to ask your corporate clients is this: do you want to offer a staff pension that will position you as an employer of choice? Or do you simply want to meet the minimum legal requirements? If the former is the answer, then communication should be high on the list of priorities.