The John Lewis Partnership has reported an initial 5 per cent auto-enrolment opt-out rate and increased saving interest from teenage employees, after a widespread engagement campaign and membership survey.
The opt-out rate has increased from 3.2 per cent¹ in February 2013, when the retail group, which also owns Waitrose, enrolled 9,000 of its workers into its £236.3m defined contribution scheme.
Dinesh Visavadia, head of pensions at the group, said the rate had increased to 5 per cent as “money is being deducted from [members’] paycheques” and predicted opt-out would gradually increase to between 10 per cent and 15 per cent.
The partnership decided to prioritise minimising opt-outs, “where we could offer the most value”, Visavadia told the National Assocation of Pension Funds’ Regulation Conference last week.
The scheme encouraged member engagement through an international campaign and conducted a survey of members, gleaning their thoughts about pension provision.
“We needed to make sure the way of engaging with the membership was different, and to think it through in terms of how it might operate,” he added.
The employer decided to use the partnership’s existing DC scheme for auto-enrolment, making sure members’ line managers were able to support their decision.
“All told, it’s very pleasing for us. We are getting there in terms of changing people’s mindsets,” said Visavadia.
Members were now looking to increase their contributions, and even young employees, at a pre-university age, were showing a marked interest in saving, delegates heard.
Visavadia warned other schemes to be “very clear” about the type of workforce they had and what they needed to do for each particular segment.
“If you engage with them [the workforce] in a very positive way, with a positive experience, you will get a positive outcome and a very low opt-out rate,” he said.
Also speaking at the conference, Jerry Gandhi, chief operating officer at Now Pensions, emphasised the importance of getting member data in line prior to auto-enrolment.
“It’s down to payroll to make sure they clean up data. Auto-enrolment is not a pensions issue, it is a human resources and payroll issue,” he said.
Gandhi added communication was also key and stressed tailored messages, using social media and new technology, would be most effective in promoting engagement.
¹The original version of this article, published on May 1 2013, mistakenly stated the initial opt-out rate to be 2.2 per cent.
