Harlow-based mobility charity Motability uses annual face-to-face briefing sessions to educate its 119 employees on pensions topics, including available pension investment options.
Currently, employees have the opportunity to self-select their own pension investment fund away from the default option out of 57 available fund options.
The voluntary briefing sessions, led by the charity’s pension provider Aviva, aim to raise pensions awareness. They cover a range of topics, such as pensions scams, the state pension, pension freedoms and pension investment options. The briefing sessions were originally introduced in May 2016, ahead of Motability making the most recent changes to its default investment option.
These presentations were initially used to explain to staff in non-technical language what changes were being made to the default investment option and why. Approximately 80% to 90% of employees attended the sessions held in May 2016. The face-to-face briefings were supplemented with a paper information pack and included investment guides provided by Aviva.
Motability also produces an annual pensions guide brochure, which provides details on the importance of planning for retirement, information around the default investment option, and signposts to where employees can find more information on other investment options. Its staff intranet site also features a dedicated pensions section, containing articles and signposts to tools such as retirement planners and income calculators. In addition, Motability uses a pensions window in June to encourage employees to review their pension contributions.
Pension scheme members can also access Aviva’s members’ site, which includes detailed information on the variety of investment options available. Jo Rose, head of HR at Motability, says: “There’s a full investment guide in there and there’s a description of each of the different funds that are available, what the charges are, where it’s invested, who manages it and so on. […] I think as an employer, we need to give employees as much information as possible for them to make the decision that is right for them.”
Motability provides a non-contributory defined contribution (DC) pension scheme, with the charity contributing 10%. If employees decide to also contribute to their pension, the organisation will match it up to 5%. To date, 80% of employees make contributions to their pension.
Rose says: “We do encourage people to make their own decisions, but recognise that the majority of people will probably go into the default, so it’s a duty on us to make sure that the default is a sensible option, taking into account circumstances.”
A month prior to its current default investment option going live in July 2016, Motability asked its employees to make an active decision to select which of the charity’s three existing default investment funds they wanted their pension pot to sit in. “We asked everybody to make an active decision, so they could stay in the old default investment option if they wanted to, or they could switch across to the new default investment option, but they had to make a choice,” says Rose. “Choosing not to do anything wasn’t really an option. We wanted a return back from everybody just to make sure that everybody had at least consciously decided to do something.”
Just under three-quarters (70%) of employees subsequently moved to the new default investment fund.
The organisation’s default pension investment option initially featured a five-year lifestyling phase that was designed to cater towards annuity purchase. This was updated for new starters in May 2014 to a 10-year lifestyling phase. In July 2016, Motability again revised its default pension investment for new joiners to introduce a 15-year lifestyling phase, which includes a mix of investments. This was to better accommodate the pension freedoms, and enable employees to have greater flexibility when planning their individual route to retirement.