Drugs firm Eli Lilly and Company bolstered the perceived value of its final salary scheme by investing in the plan and the online tools behind it
In 2002, Eli Lilly and Company (Lilly) reconfirmed that it wished to continue to provide pension benefits to employees through a defined benefit arrangement. In making this substantial commitment to the plan, the company wanted to ensure that it maximised not only the actual value to the employees but also the perceived value of the scheme.
This led the company to a number of action steps. Firstly, it rebranded its internal HR communications using the strap line “Because People Matter” to reflect the external Lilly brand of “Answers that Matter”.
It then launched an online flexible benefits scheme, called LillyFlex, which offers employees a range of lifestyle options. Embedded in the new selection of online benefits is the opportunity to make additional voluntary contributions (AVCs) via salary sacrifice. These special employer contributions pass on a 5% top-up to staff, funded by the company’s national insurance savings.
Linked to the online LillyFlex site was a bespoke pensions modelling site. This pulled out employees’ personal data and allowed them to model their income in retirement with a range of alternative retirement dates, special employer contribution levels, working hours and varying amounts of tax-free cash. This not only allowed employees to appreciate the cost of saving for pensions and, therefore, to value the Lilly Pension Plan, but it also allowed them to make effective choices for their own financial future.
Since its launch in mid-2004, LillyFlex and the pension options within this have proved highly successful. Over 90% of employees have made positive choices through the online tools and around 60% of employees have actively modelled their pension. Take up of additional savings through AVCs and special employer contributions has increased from 30% of the employee population to 50% of staff.
The annual opening of the flex plan also provides the HR teams at the site with an ideal opportunity to interact with employees and to reinforce to them the value of their overall reward package. The company has also used these annual reward roadshows as the opportunity to roll out online total reward statements and to explain the Finance Act and Pensions Act changes, which were introduced in 2006. Feedback from employees for these sessions and the online tools has been excellent. In a recent survey, almost 90% rated the roadshows as excellent. The pension plan was also shown to be one of the most highly-valued attributes of working at Lilly, and the one with the highest approval rating from employees – 97% voted it as favourable.
The programme has met all of its original business objectives around improving employee appreciation but it has also exceeded its original business case for savings generated through reduced employer national insurance contributions. The programme has also been key in getting employees online, and subsequent training delivery has been completed online for all employees, generating additional savings for the company.
The pension plan itself and the rebranding that took place also provided the opportunity for the whole of HR to reposition itself and reconfirm the balance between individual and company responsibility, encouraging employees to self select and make informed choices.
Julie Osman is director of pensions and benefits at Eli Lilly and Company
Best practice tips
- Align external and internal branding.
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- Be clear on messages and maximise communication opportunities.
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- Have a clear business case to demonstrate value to the organisation.
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- Gain the support of the broader HR community to position pensions as part of the value proposition to employees.