Auto-enrolment Case Study 24 October 2012 Carol Young – HEINEKEN in the UK Pensions Manager
Some background Carol Young HEINEKEN in the UK • Pensions Manager HEINEKEN in the UK • UK’s leading beer & cider producer • DC Plan: launched in July 2011 c. 2, 100 active members • Heineken®, Foster’s, Strongbow, Bulmers, John Smith’s, Kronenbourg 1664 • DB Plan: c. 41, 000 members £ 2. 4 bn assets • c 2, 100 employees across 7 main sites • 1. 2 bn litres of beer and cider p. a. • Managing 1, 200 UK pubs • 3 separate payrolls
Outline • • The pensions challenge at HEINEKEN in the UK Our aims and principles How we engaged employees Launching our DC plan Outcomes so far Steps remaining Learning
The pensions challenge 2008: Heineken acquired Scottish & Newcastle Existing DB Scheme 2009 2012 c. 42, 000 members c. 2, 300 actives £ 570 m Deficit £ 1 bn Deficit? £ 50 m accelerated contributions Recovery Plan Up to £ 61 m p. a. additional employer contribs. An unsustainable risk to our business To do nothing was not an option! Your aims and drivers may well be different but an insight into our journey might still help in your planning
HEINEKEN’s aims and principles Requiring a solution that was: A “must do” business project ü Sustainable Not an HR project ü Competitive in the market place Top level buy-in & active involvement ü Centred on informed choice ü “Future Proofed” for Automatic Enrolment Engagement Comprehensive and 2 -way Colleagues Representatives HR Managers
Engagement Realistic and measureable communication objectives: Understand • • • Why Heineken is doing this How it will affect me How do I get further information/support Accept Short term: Medium/longer term: • Change is inevitable but • New DC is Company support valuable, fair and remains well governed • Approach is well • The need to take considered responsibility for own retirement • New DC is a quality plans scheme and flexible Critical for meaningful engagement Underpin all subsequent activities
Planning & engagement to launch Gradual build, multiple iterations and follow-through support 2010 Q 2 Q 3 2011 Q 4 Budget Setting & Provider Selection Holding Position & Building Awareness Organisational Readiness Q 1 Q 2 Q 3 DC Formal LAUNCH Consultation Education & Sign-up Ongoing support Understanding Acceptance
Engagement: your provider can help Multiple channels: in workplace and at home PLUS face to face What will work best for your members?
Outcomes: Launch Group Take-up 94. 4% The overall take up rate 50 Only 50 colleagues from our DB DC group chose not to join Contribution choices <15% Opted for lowest initial contribution >70% Started at highest contribution level or are tracking towards it Investment choices Only 52 >11% Colleagues defaulted to Balanced Lifestyle (didn’t tick anything) Chose core fund or full fund range The Rest Made an active choice across 3 lifestyle profiles
• No complacency! • Enrolled automatically through offer letter and Contract of Employment flyer – explains default options and how to make changes • Take up still high but we have to keep working at it…. • …less evidence of active engagement with details – more default decisions than for launch population 10 Finessing the Engagement Strategy Enrolling our population post launch • Pensions training at new start induction courses • Where employee “opts out” the pensions team issues a letter reminding of benefits given up • All information available via our HR Portal • Remind colleagues of providers support and information available online and by phone
Colleagues’ views “There was a lot to take in but it helped me make a positive decision about my future pension. ” Production colleague, Hereford “The company came across as open and keen to explain the facts as clearly as possible. ” Sales colleague, Edinburgh “For the first time I feel I understand the basics about pensions. It’s not always good news, but now I feel able to start planning for my own future. ” Contact Centre colleague, Livingston
Steps remaining to staging date We have a great base but there’s still work to do! 2012 Q 3 2013 Q 4 Q 1 Q 2 Payroll vs. provider solution? Design & agree detailed processes & governance Organisational readiness incl/comms Annual renewal Q 3 HUK Staging Date Final testing Review Preparation Go Live
Learning Next Effective 2 -way communications key to building member engagement and confidence Buy-in from the very top agreed objectives coupled to the right project structure Taking the time to build real understanding – crucial to informed choice Payroll set up is key to success start preparing early – will be a business wide project
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