Auto-enrolment Case Study

24 October 2012

Carol Young – HEINEKEN in the UK

Pensions Manager

Carol Young

•Pensions ManagerHEINEKEN in the UK

•DC Plan:launched in July 2011c. 2,100 active members

•DB Plan: c. 41,000 members£2.4bn assets

HEINEKEN in the UK

•UK’s leading beer & cider producer

•Heineken®, Foster’s, Strongbow, Bulmers, John Smith’s, Kronenbourg 1664

•c2,100 employees across 7 main sites

•1.2bn litres of beer and cider p.a.

•Managing 1,200 UK pubs

•3 separate payrolls

Some background

• The pensions challenge at HEINEKEN in the UK• Our aims and principles• How we engaged employees• Launching our DC plan• Outcomes so far• Steps remaining• Learning

Outline

The pensions challenge

An unsustainable risk to our businessTo do nothing was not an option!An unsustainable risk to our businessTo do nothing was not an option!

Existing DB Scheme

£570mDeficit

£1bnDeficit?

20092009 20122012

c. 42,000 membersc. 2,300 actives

2008: Heineken acquired Scottish & Newcastle

Recovery PlanRecovery Plan

Up to £61m p.a. additional employer contribs.

£50m accelerated contributions

Your aims and drivers may well be different but an insight into our journey might still help in your planning

Your aims and drivers may well be different but an insight into our journey might still help in your planning

HEINEKEN’s aims and principles

Requiring a solution that was:

Sustainable

Competitive in the market place

Centred on informed choice

“Future Proofed” for Automatic Enrolment

A “must do” business project

Not an HR project

Top level buy-in & active involvement

A “must do” business project

Not an HR project

Top level buy-in & active involvement

Engagement Comprehensive and 2-way

ColleaguesRepresentatives

HRManagers

Engagement

UnderstandUnderstand

• Why Heineken is doing this

• How it will affect me• How do I get further

information/support

AcceptAccept

Short term:• Change is

inevitable but Company support remains

• Approach is well considered

• New DC is a quality scheme and flexible

Realistic and measureable communication objectives:

Medium/longer term:• New DC is

valuable, fair and well governed

• The need to take responsibility for own retirement plans

Critical for meaningful engagementCritical for meaningful engagement

Underpin all subsequent activitiesUnderpin all subsequent activities

Planning & engagement to launch

Gradual build, multiple iterations and follow-through support

Q3 Q4 Q1 Q2 Q3

Holding Position & Building AwarenessHolding Position & Building Awareness

Organisational ReadinessOrganisational Readiness

Ongoing support Ongoing support

Formal Consultation

2010 2011

Education & Sign-upEducation & Sign-up

DCLAUNCH

AcceptanceAcceptanceUnderstandingUnderstanding

Budget Setting & Provider SelectionBudget Setting & Provider Selection

Q2

Engagement: your provider can help

Multiple channels: in workplace and at home PLUS face to face

What will work best for your members?

Outcomes: Launch Group

94.4% The overall take up rate

50Only 50 colleagues from our DB DC group chose not to join

<15% Opted for lowest initial contribution

>70% Started at highest contribution level or are tracking towards it

Only 52 Colleagues defaulted to Balanced Lifestyle (didn’t tick anything)

>11% Chose core fund or full fund range

The Rest

Made an active choice across 3 lifestyle profiles

Take-up

Contribution choices

Investment choices

• No complacency!

• Enrolled automatically through offer letter and Contract of Employment flyer – explains default options and how to make changes

• Take up still high but we have to keep working at it….

• …less evidence of active engagement with details – more default decisions than for launch population

10

Enrolling our population post launch

Fin

essin

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he E

ng

ag

em

en

t S

trate

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• Pensions training at new start induction courses

• Where employee “opts out” the pensions team issues a letter reminding of benefits given up

• All information available via our HR Portal

• Remind colleagues of providers support and information available online and by phone

Colleagues’ views

“For the first time I feel I understand the basics about pensions. It’s not always good news, but now I feel able to start planning for my own future.”

Contact Centre colleague, Livingston

“There was a lot to take in but it helped me make a positive decision about my future pension.”

Production colleague, Hereford

“The company came across as open and keen to explain the facts as clearly as possible.”

Sales colleague, Edinburgh

Steps remaining to staging date

We have a great base but there’s still work to do!

Q2 Q3 Q4 Q1 Q2

Design & agree detailed processes & governanceDesign & agree detailed processes & governance

Payroll vs. provider solution?

Payroll vs. provider solution?

Q32012 2013

Final testingFinal testing

HUK Staging

Date

Go LiveGo LivePreparationPreparation

Organisational readiness incl/commsOrganisational readiness incl/comms

Annual renewalAnnual renewal

ReviewReview

Learning

agreed objectives coupled to the right project structure

Buy-in from the very topBuy-in from the very top

to build real understanding – crucial to informed choice

Taking the timeTaking the time

start preparing early – will be a business wide project

Payroll set up is key to success

Payroll set up is key to success

Effective 2-way

communications

Effective 2-way

communications

key to building member engagement and confidence

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