Motability has always been keen for staff to be fully engaged in, and informed enough about its contract-based defined contribution stakeholder pension plan, so that they can decide how best to invest their pension contributions.
This is why the mobility support services charity has produced a comprehensive pensions communication strategy, which includes a guide for staff about the option to obtain independent financial advice and how to go about accessing this.
Jo Rose, HR manager, says: “We always encourage [pension fund engagement] through the communications that we offer, and we also put lots of tools on [our] own website to help [staff] plan for their retirement and think about how much they’re contributing.”
This support was particularly important when the organisation decided to switch its default fund earlier this year following the downturn in the economy and the introduction of the pension freedoms in 2015.
The switch, which came into effect from July 2016, saw the take-up of a new fund with a 15-year lifestyling phase and a different mix of investments, structured on the premise that employees can make a number of choices about what to do with their retirement fund, rather than on the assumption that they will buy an annuity, following the abolition of compulsory annuitisation, which came into effect in April 2015.
The employer’s previous default option, also with Friends Life, now part of the Aviva Group, had a lifestyling phase of five years, which meant that the pension de-risked over a period of time, five years before employees’ planned retirement age.
“We were looking at high engagement [levels] and for staff to review their choices and make a decision about how they wanted to invest their funds,” says Rose.
Motability’s paternalistic culture drives its commitment to ensure that its staff are fully engaged in their pension fund, despite less than 10% of staff actively making their own investment decisions.
Rose says: “It’s very much the chief executive and the executive team that [is driving] the need to do the right thing by staff with the pension and making sure that the scheme is fit for purpose.”