Vodafone is reviewing its communication strategy after a significant increase in the size of its defined contribution pension plan, following auto-enrolment and an influx of members from its Cable & Wireless acquisition.
The telecoms company increased the active membership of its DC plan to 14,634 this year, from 8,331 in 2013. Large changes to scheme size are not uncommon since auto-enrolment, but experts warned schemes undergoing such increases should be mindful of the effect on scheme demographics and the need to communicate with members.
Vodafone's CWW acquisition
Vodafone acquired the rival telecoms company in 2012 and brought around 5,000 members into its DC plan on December 1 2013, boosting the active membership again after more than 1,200 were auto-enrolled in April 2013.
Earlier this year, Vodafone contributed £325m to its defined benefit scheme as part of a merger with the Cable & Wireless Worldwide Retirement Plan.
A new section was created in the DB scheme to house the CWWRP in a move intended to increase efficiency.
Lyndsay Perkins, head of client services at consultancy AHC, who worked with Vodafone on its website and communications, said the change in size had caused the scheme to reevaluate.
She said the Vodafone scheme already had a strong website which included modelling software, investment information, video and a link to the administrator’s website where members could make changes.
"All that information is relevant to the Cable & Wireless people, so it's a case of what else they need," said Perkins.
She added they were currently in the process of transferring information about the old Cable & Wireless scheme on to the Vodafone website.
The consultancy began working on the communications strategy with Vodafone in 2010 but it will now be reviewed to reflect the scheme’s increased size.
Perkins said the strategy was viewed as a "living document", allowing the scheme to keep ahead of changes to the pensions landscape.
Significant changes to scheme size may create challenges for schemes looking to adapt to ongoing changes to pensions legislation. Schemes undergoing large changes to their membership should consider the effect it would have on the demographics.
“If you have a smaller scheme with a majority of highly paid, fairly sophisticated people and then there’s an influx of low-paid weekly workers, it changes your risk profile,” said Martin Freeman, director at consultancy JLT Employee Benefits.
He added schemes “will have to be looking at default strategy anyway, but the change [in scheme size] could make it more complicated".
Andy Cheseldine, partner at consultancy LCP, said growing by such a large proportion was less common among schemes that already had thousands of members.
“With auto-enrolment there were quite a few that went from hundreds to thousands of members,” he said, adding such a change in scheme size necessitated a change in trustees’ attitude and scheme governance.
