Stagecoach has introduced auto-enrolment for its group self-invested personal pension (Sipp).
The first wave of employees has been automatically enrolled into the scheme, which was brought in for all staff last May to replace the bus company’s previous stakeholder plan.
Since the Sipp began, Stagecoach has amended the terms and conditions for new staff to state that they would be automatically enrolled in the group Sipp after 12 months.
The scheme’s default contribution level is set at 4%, but employees can contribute as much above this as they want. The company will then match contributions between 4% and 6%.
Before auto-enrolment was introduced, only 18% of staff had chosen to join the Sipp, which is provided by Hargreaves Lansdown. Paul Goddard, Stagecoach’s pensions manager, said: “The timing is not great, with the credit crunch and everything else going on, to be going to people and asking if they would like to put some money in the pension scheme, but it is good that we ended up with 1,000 employees in the scheme who were not previously saving for retirement.”
But Goddard added that a number of existing employees had not chosen to join the scheme.
“We have employees who, historically, could have joined a very good defined benefit scheme and chose not to. We are resigned to the fact that the chances of these employees joining a defined contribution (DC) scheme are pretty remote. There is not a great deal we can do to change that – they are just not engaged at all. It is something that has baffled us for a long time.”
Most members of the Sipp have chosen to use its default fund, but this is something Goddard hopes will change over time now the firm has switched from its stakeholder scheme.
“One of the attractions of the group Sipp is that, as time goes on and members become more switched on to DC investments, they have the flexibility to move between managers and strategies you do not normally get with a group personal pension with one provider,” he said.