BT will increase the matching contribution rates for its contract-based defined contribution next April.
From April 2010 the default employer contribution rate will rise to 8%, from the current 5%, with a matching
employee contribution rate of 7%. Employees wishing to contribute a little more can also increase their matching
contribution rates to a cap of 9% from BT.
For example, staff opting to contribute 7.5% will attract an 8.5% contribution level from BT, while staff choosing to contribute 8% will get the maximum 9% employer contribution.
Speaking at the National Association of Pension Funds Annual Conference and Exhibition 2009 in Manchester, Kevin O’Boyle, group pensions manager at BT, said: “The aim is to give people a decent pension if they wish.”
The BT scheme puts a strong emphasis on member communication and guidance. “It is very much a partnership with the supplier because the supplier would like people to invest in funds outside the default fund [because they will make their money from the fees on those investments],” explained O’Boyle.
By being so thorough with communications BT believes that members will have no comeback if they have not saved enough for retirement. “Also there is an audit trail. At least we can say we did the best we could,” said
O’Boyle. “It is the individual’s fault if they don’t save for retirement.”