Whitbread removed investment choice from its trust-based defined contribution (DC) pension scheme because of concerns that employees’ lack of understanding was putting them off pensions altogether.
Speaking at the National Association of Pension Funds’ conference, Lesley Williams, group pensions director at Whitbread, said: “As trustees, we realised we were being unrealistic in expecting people to make investment choices.”
Feedback from employee focus groups also showed that people were afraid of investment choice.
In removing this choice, the company hoped to remove one of the barriers to employees joining the scheme.
Williams added the company also discovered that the scheme information booklet had been altered a few years ago, so that details of ‘adventurous’ investment funds were moved to the top of the relevant page, ahead of information about balanced investment options. As a result, investments in adventurous funds rose, which indicated members were selecting the first choice in the list, said Williams.
“I can’t stress enough the need to understand your employees,” she added.
This mirrors the NOW: Pensions model, of simplifying pensions, with a sophisticated investment model behind the scenes.
This ensures the element that is constantly seen by employees and employers – investment choice – is able to flex with market conditions, in the hands of global investment expertise.
I did some work for Whitbread some time back related to DB management so the latest strategy from Lesley has nothing to do with that.
Lesley and I do however strongly agree that as an industry we need to help members of pensions schemes get better outcomes and a clear aligned well governed default fund makes great sense.
That means a Trust based DC where the Trustees Govern well and proactively manage the default fund will, over time produce better outcomes and value for members. This is especially true now with the significant volume of new pension scheme members following auto enrollment.
i have submitted my bank details re: your letter regarding pension scheme in your employment.and entitlement. please inform me of any updated news with regards to this