Oracle Pension Plan has increased its membership to 87% through a communications exercise, which also led to 74% of members making active investment decisions
And the software firm has claimed the initiative would never have been successful if it relied solely on making information available through its member website.
“Our experience is a website by itself does not achieve the objective,” said Vance Kearney, vice president for human resources, EMEA at Oracle. “It does not really engage employees or stimulate a high level of interest.”
Websites are generally seen as the easiest form of member communications as companies often struggle to attract employees to pension presentations.
The firm hired pensions communication company Secondsight to conduct 123 group presentations to its 3,200 staff. This was complimented by webinars and a 16-minute video for new joiners.
Kearney added: “The website has a place as part of member communications, but as a sole method of communication it is not enough. You also need face-to-face engagement and presentations to flesh out the issue.
“There is nothing wrong with the technology – but there is no substitute to face-to-face communication.”
Objectives
Oracle has made a series of acquisitions in the UK over recent years – the most recent being the takeover of Sun Microsystems. This left the parent company with 32 separate plans, the largest of which had 2,000 members.
The firm had closed its defined benefit scheme in 2002 and felt there was a lack of interest and understanding among its members over the additional risk they were expected to take on in a defined contribution (DC) plan.
In 2010 the firm decided to close its trust-based occupational DC schemes, and set up a new group personal pension (GPP) plan for all staff.
Kearney explained there were three reasons behind this decision:
To reduce the cost of administration and share that cost saving with members through a higher contribution rate;
To create an environment where employees realised their retirement income was determined by the amount of money they put into their pension and how it was invested;
To re-engage and re-energise the employees around the subject of saving for retirement.
Average basic salary at Oracle is £54,000 a year, which goes above £70,000 once bonuses and other benefits are added in.
But Oracle believed their members were not making enough of the company-provided pension.
Membership stood at an impressive 77%. But most did not contribute above 6% of their salary – despite additional available national insurance contributions – with more than 80% invested in the default fund.
“Oracle came to realise that they were giving people too much credit for understanding what was going on,” said Mark Bingham, partner at Secondsight.
“However intelligent these people were, it was still important to take it back to basics.”
Exercise
Secondsight undertook the staff presentations across Oracle’s nine UK locations. These were mostly intimate gatherings, typically attended by 15-20 people.
Throughout the exercise, 60% of employees attended the presentations.
Bingham said the high number of attendees was due to the invitations they sent out which clearly identified what employees would learn by attending: an overview of the benefits of saving for retirement, as well as details about contributions and investment options.
Kearney said word-of-mouth was also a powerful tool for getting more attendees.
“If people who went to the first presentations were happy with it, they told their colleagues who then went along too,” he said.
Of those who attended the presentations, 98% joined the new scheme.
Secondsight also produced webinars and a 16-minute joiners’ video to sit on the plan’s website, split into eight clearly-labelled chapters for members to select.
Bingham said this helped members quickly identify the sections which were relevant to them.
Oracle also looked to increase the number of members making active choices by setting up three managed fund profiles – cautious, balanced and adventurous – in addition to the scheme’s existing default fund.
Previously, more than 80% of members had invested in the default fault. But since the presentations, 74% of members now make an active decision to invest in one of the managed fund profiles or to self select from the funds available on the Standard Life platform.
Bingham added: “There will be follow-up presentations for those members close to retirement, and presentations for transferring members as well.
“As the fund grows, the ongoing communications service is going to have to grow with it.”
