Law firm Veale Wasbrough Vizards increased both staff contributions and active membership of its pension fund after a scheme overhaul allowed members to view their Isas and investments alongside their pensions.
Employers have been moving towards a more holistic view of workplace benefits rather than considering pensions in isolation.
Some pensions commentators have said that should the current pension tax relief structure be changed to more like that of Isas – as proposed in the government's recent consultation – it could prompt employers to start paying into Isas for their members alongside or instead of pensions.
Veale Wasbrough Vizards
The scheme has 175 active members.
Members are enrolled on a 2 per cent employee contribution, matched with 3 per cent from the employer. This increases to 6 per cent from the employer over three years.
The new scheme has prompted a 13 per cent membership increase and an increase in contributions from 17 per cent of the membership.
In a separate effort to join up how people view their savings, the government and industry are also working towards the introduction of a 'pensions dashboard' in the next two years, which would allow members to view all their pension pots in one place and help consolidate the picture of their overall wealth. However, some remain sceptical of the dashboard's proposed benefits.
Easy to manage
VWV introduced the new scheme in February this year with the intention of “modernising the pension scheme and offering something flexible and easy to manage to our employers”, according to Kate Legg, HR manager at the firm.
She added: “It gives the opportunity for people to manage all sorts of other products through the same offering.”
Introduction of the new scheme prompted a 13 per cent increase in the number of active scheme members. Engagement among existing members also increased, with 17 per cent of staff raising their contributions.
More employers are moving towards total wealth growth rather than just pensions
Daniel Taylor
Legg said: “We’ve now got a higher proportion of scheme members than we’ve ever had before.”
The scheme operates a contribution structure that increases with service. Basic contributions are 2 per cent from the employee and 3 per cent from the employer. The employer’s contribution increases over time, reaching 6 per cent after three years.
The scheme has 175 members and will be used as the default for auto-enrolment when the company stages in July next year.
One-stop shop appeal
Nathan Long, head of corporate pensions research at platform provider Hargreaves Lansdown – which provides the platform to VWV – said combining pensions, Isas and other investments was generating interest among employers due to the appeal across age groups.
He said: “We’ve found increasingly professional services firms are choosing to go for it… We’re helping them save money and educating them they need to save," adding that different members would favour different types of saving depending on their stage in life.
Prior to the launch, the scheme was promoted to staff via email communication, roadshow events and face-to-face meetings across its three locations.
Long said this approach was crucial, “because in a big [meeting] people won’t feel comfortable asking questions about their personal financial situation”.
Daniel Taylor, head of administration services at consultancy Premier, said: “More employers are moving towards total wealth growth rather than just pensions. That might mean helping them buy a house.”
Taylor said there had been a shift towards employers viewing pension contributions in the context of their employee's overall wealth, and proposing benefits such as paying into an Isa as more suitable for some.
The main barrier to workplace Isas, Taylor said, is employers do not get the tax relief they would with pension contributions. However, he said a shift to the taxed-exempt-exempt regime of Isas would remove that incentive and make them a more likely choice for employers.
