Audit, tax and consulting organisation RSM created its defined contribution (DC) pension scheme in 2010 without a default investment fund, encouraging active decision-making among its 3,600 UK-based employees.
RSM’s online joining process encouraged staff to utilise a risk-profiling tool, provided by Aviva. This aligned with the available investment funds, including five bespoke lifestyle funds that were created solely for RSM staff. These were identified as: defensive, cautious, moderate, diversified and adventurous.
Roger Sheldon, pensions manager at RSM, explains: “We enabled people to engage at a level that suited them. They could say ‘I’ve got my risk profile, I’ll just pick my RSM fund that matches my risk profile’, or ‘I’ll look at a wider batch of stuff’, or ‘I want to look at everything.’”
After the auto-enrolment regulations were implemented in October 2012, RSM used its cautious fund as its default. Still keen to encourage decision-making, though, RSM does not proactively promote the default, instead pushing the continued use of the risk-profiling tool. It also provides education, including bite-sized webinars via the online joining process.
“Anybody who wants to join our scheme before the auto-enrolment process kicks in has to make [an investment] choice,” says Sheldon.
“Our scheme is open from day one to everybody, so auto-enrolment is at the back end of the processes, to catch those people that don’t engage.”
Later this year, RSM will introduce a new communications tool, provided by Lane Clark and Peacock (LCP). Sheldon explains: “This will enable us to communicate to people who are, for example, in the default fund and are auto-enrolled, and encourage them to look at their risk profile and pick an appropriate fund.”
To date, around 2,000 employees have engaged with the pension scheme and made an investment decision. This compares with the 990 staff who were automatically enrolled in July 2018.
“If [employees] are engaged in pensions from day one, [they] start to understand the benefit, [they] value the benefit, [they] have more involvement in managing that asset and [they are] likely to put more in as well. It’s not just whether that choice is the right one in terms of investment, it’s that they have made a choice [at all that] is the key for engagement,” Sheldon concludes.