Case study: Nelsons ups employee contributions by 54%

It also increased pension take-up from to 49% to 67% through a poster campaign (example below), emails, presentations and more than 120 individual meetings with employees.

All contribution-based schemes can take lessons from Nelsons on the value of communication in driving up members’ retirement savings and attracting more employees into the scheme.

The company wanted to revitalise its GPP by taking advantage of salary sacrifice and individual engagement to lure more employees into the scheme.

By the end of the process, 95% of those in the pension scheme were saving through salary sacrifice, with Nelsons investing 6.9% of their national insurance savings into their pension pot.

“We had a good package but hadn’t really communicated it well,” said Nelsons head of human resources Simon Rickatson.

The first step for the employer was to assess the current communications provider, which it found to be lacking preparedness and pro-activity, particularly failing to take advantage of incentives such as salary sacrifice.

Rickatson said: “Salary sacrifice had been around for a number of years, but it had not been on the agenda at all with Nelsons.”

Deciding the provider was merely maintaining the status quo, the company looked at other organisations which could enhance their offering.

Secondsight was chosen due to its reliance on performance rather than a set contract and the performance goals it suggested.

“We didn’t make some of the face-to-face meetings compulsory,” Rickatson said. “Some of the numbers would have been greater had we done things like that.”

Nelsons decided to go down the “informed choice” route for participation, rather than forcing employees to the individual meetings.

The advent of auto-enrolment will largely negate this approach, but Nelsons wanted to ensure the meetings and seminars came across as productive advice, rather than employer compulsion.

Informing expectations

In these meetings, employees were presented with their projected retirement income based on their current savings and contribution level.

They then asked employees what pensionable income would be acceptable to them, for example half of their current salary.

On this calculation, 71% of members were moved on track with these expectations, whereas previously 79% had not been on track.

“We definitely saw an uptake in how much people were contributing as a result of that,” said Rickatson.

The initial communication drive, typified by the poster below, is not the end of the story for this plan.

Nelsons will hold an annual meeting to capture as many staff as possible, and continue to reach out to those who have not yet joined at six-month intervals.

At the beginning of next year, as salary increases come in, the employer is planning to encourage employees to commute some of those increases into deferred pay.

Rickatson said: “We can start hitting them again, saying, ‘Now’s the time to consider that you have more money in your take-home pay, this is what we can do under salary sacrifice'.”

Communication was crucial to Nelsons, at both the presentations and the one-to-one meetings, promoted by email and posters.

Employees were told if they sacrificed just 2.5% they would receive 5% from the organisation – a message which has attained near-complete acceptance among those enrolled.

Schemes should be cautious in adopting salary sacrifice for all employees, and make sure it will not impact negatively on those at the lower income end who may be at risk of falling below minimum wage.

The HR department did receive some kick-back once the first round of salary sacrifice came in, where employees questioned the lower figure.

But by emphasising the net pay figure, and the extra tax relief, employees were positive about the changes, added Rickatson.