Auto-enrolment ramped up a gear in 2014 as the reform began to sweep up medium and smaller-sized employers, highlighting new challenges around how to ensure employers had the support they needed.
During the year, the Pensions Regulator began to sound alarm bells about rising non-compliance among staging employers.
We have chosen five of our best case studies from the year to demonstrate how auto-enrolment progressed over the year.
SME uses investment guarantee to ensure good AE outcomes
April 22
Ensuring members have a good income in retirement is a key pillar of auto-enrolment.
However, this aim has been questioned by those who claim that the minimum contributions will not provide members with an adequate pension pot – even with automatic escalation of those contributions.
In April, we reported that engineering company Centek had enrolled members into a DC arrangement with an underpin on investment returns.
The defined ambition-like setup required the employer to make an additional contribution should the return on investments not achieve a 4 per cent return.
Paul Cooper, financial controller at Centek, said the underpin relied on the lack of investment options offered by mastertrust provider Now Pensions, who provide the scheme.
He said: "We could only really make it work with someone where there was no investment choice."
Wolseley moves to quell creeping opt-out rate
December 1
The auto-enrolment opt-out rate for larger employers was lower than expected this year, causing the Department for Work and Pensions to revise down projections to 15 per cent from 30 per cent.
However, scheme managers have predicted rates may creep up as smaller employers stage, contributions rise and communication campaigns fade.
Such a creep appeared to have happened at plumbing products supplier Wolseley, as we reported in December.
Wolseley had 3.5 per cent opt out after auto-enrolling in August 2013, but it has since risen to a monthly average of 5-10 per cent.
The scheme is planning a communication campaign to remind members of the benefits and combat the upward creep.
Neil McCawley, head of rewards and benefits at Wolseley, blamed the increase on the high proportion of younger members being auto-enrolled.
He said: "When we do the first re-enrolment of our opted-out employees in May-June 2016 they will have been employed by us for at least three years. I would expect, at this point, that fewer people will choose to opt out again."
SABMiller to offer pension-plus savings options after 20% opt out
October 16
Other schemes used changes to the pension offering to combat opt out rates, as we reported in October.
Drinks company SABMiller planned to launch additional savings options to combat an opt-out rate of 20 per cent.
One in five of the scheme's 700 UK staff opted out, around twice the average of larger employers.
The scheme now plans to offer a self-invested personal pension plan and a save-as-you-earn scheme to lower the rate.
Roger Fairhead, group compensation and benefits director at SABMiller, said: "Because of the high level of pension contributions, and also the high salaries, we have a number of employees who are caught by the £40,000 limit."
More than 10 per cent of the company's employees are affected by the annual and lifetime allowance reductions to £40,000 and £1.25m, respectively.
The drinks company also offers employees a corporate Isa and share incentive plan.
Findel uses auto-enrolment to chisel down costs
January 13
For many schemes, auto-enrolment provided an opportunity to evaluate and update their existing pension provision.
In January, we reported on home retail and educational materials supplier Findel, which overhauled its pension offering to generate savings in order to cover the costs of auto-enrolment.
Members are auto-enrolled on minimum contributions of 1 per cent from employee and employer. After 3 months' membership there is an option for members to contribute 3.5 per cent or more for a 5 per cent employer contribution, or 5 per cent or more for a 6 per cent employer contribution.
Maxine Morgan, group HR director for Findel, said it still had concerns about financing the higher-rate scheme.
She said: "We've still got a concern about the cost associated with lots of people choosing to opt in to the upgraded scheme. So we've not gone mad on [communicating] that, but we have done more than the bare minimum."
Less than 1% opt out at caterer despite seasonal staff headwinds
October 30
In October, we reported on catering company Jenkinsons which saw less than 1 per cent opt out, despite having a large seasonal workforce.
The challenge seasonal workers present to auto-enrolment had already been raised earlier in October, when beauty company Nails Inc raised concerns that members enrolled over Christmas may opt out in January.
Jenkinsons has a core staff of roughly 60 permanent staff and a pool of around 400 casual staff employed on zero-hours contracts who work during peak seasons.
Just over 85 per cent of the workforce were eligible for auto-enrolment, which the company completed in January.
James Brammeld, financial director at Jenkinsons, said: "Opt-outs have been three out of about 400 and one of those was a guy [who] was retiring. It might go up as contributions increase."
Brammeld credits the company's high retention to the posters and letters used to communicate the changes to staff.
