Kellogg’s has increased take-up rates of its workplace pension from 60% to 97% after introducing auto-enrolment and implementing a new scheme with gradually escalating contributions.
The firm’s new scheme, provided by Axa, allows employees to start off their contributions at 3% with an employer contribution of 5%. This moves up on 1 April (to coincide with pay rises) to a 4.5% employee contribution and a 7.5% employer contribution.
In year three this rises to the maximum 6% employee contribution and 10% employer contribution. There is also the option, for those who want it, to start at the top level from day one.
Tom Stevenson, pensions manager at Kellogg’s, said: “It [the scheme] is easy to administer as an employer, and staff like it because the rise in contribution is tied in to pay rises so they’re not left with less to take home each month.”
Concerned about increased life expectancy and how its employees might realistically fund their retirement, Kellogg’s conducted a review into its pension provision at the end of last year. At this time the firm offered a defined contribution scheme with employees contributing 6% and Kellogg’s 10%.
However, the firm found that for some employees, particularly the younger starters, this level of employee contribution was a barrier to joining the scheme.