EXCLUSIVE: Bromford Group has closed its career-average revalued earnings (Care) pension scheme to new members as it streamlines its pension offering and focuses on communicating auto-enrolment to staff.
The social housing organisation previously had five pension schemes available to its 1,300 staff, comprising two local government pensions, two defined benefit (DB) pensions, one of which is the Care scheme, and a stakeholder defined contribution (DC) pension.
One of the DB schemes and one of the local government pension schemes are closed to new joiners, and the Care scheme was closed to new joiners from 31 March 2013.
Julie Leo, director of HR at Bromford Group, said: “The decision we had to make was, do we want to keep defined benefit pension schemes in the future?
“On a financial and risk level, defined benefit is a much riskier scheme. The schemes that we have are in large deficits.”
The organisation introduced the stakeholder pension in 2011. The scheme is aimed at its lower-paid employees who may not be able to afford the Care scheme’s required 11% contribution level.
“From a business point of view, we have quite an interesting profile of people,” said Leo. “Although we had this really good Care scheme, very few employees were going into it because it was too expensive for them.
“For employees who are lower paid and where we have a higher turnover, it wasn’t a very attractive option, although it looks like it on the face of it. This is why we brought in the DC scheme. It’s a cheaper alternative and has flexibility.”
Bromford Group launched a communications and education programme in October 2012 to ensure its employees understood pensions. Leo added: “With the move towards auto-enrolment, it’s been about what we can do as an organisation to offer the right pensions that are manageable and affordable for the business, but are also attractive and affordable to employees, and what can we do to help staff understand pensions more?”
Working with consultancy Mercer, the organisation held roadshows for staff, presentations and video voiceovers. It created a character called Fred, who guides employees through pensions. “We’ve also split things into modules, where staff can go in and take bites of different elements of pensions, from the very basic ‘what is a pension’ to ‘what is salary sacrifice’ and everything in between,” said Leo.
Bromford Group also uses Yammer to encourage conversations among staff, as well as chat-time sessions. Leo added: “We are seeing that people are asking questions and an increase in pension scheme membership too.”
It also used Yammer and its various employee forums when consulting with staff about the closure of the Care scheme.
It also began to communicate auto-enrolment at the end of 2012, ahead of its 1 October 2013 staging date. “We wanted everyone to see the big picture on pensions and where we will be going,” said Leo.