HR REWARD AND BENEFITS


with cash plans. Because they are having to consult with their workforce anyway, they can make these fundamental changes.” At the other extreme, Darren Hockaday, HR director at


London Overground Rail Operations (LOROL), is able to state there “has been no knock-on effect to other benefits” – largely because LOROL is unusual in still offering a defined benefit scheme to new members, and all but 200 of its 1,200 employees are already members of it. The bulk of employer cost-cutting, however, is focusing on


diluting benefits without actually transgressing contracts of employment by, for example, trimming features on PMI and removing little-used ‘nice to haves’, eg concierge benefits. There is also a distinct trend towards attaining previously overlooked tax and NI savings through salary sacrifice. Tobin Murphy-Coles,


commercial director at Lorica


Employee Benefits, says: “Salary sacrifice is increasingly being extended to health screening purchase and to life and PMI top-ups, but pensions and cars are the really big ones. There has been a definite increase in salary sacrifice on pensions during the past two years and, although cars were previously thought of as too complex, they have become much easier to do over the past year or so because of new software.” Conversely, by encouraging re-appraisal of the benefits


package as a whole, auto-enrolment has led to some firms increasing their provision of other benefits. For example, retail services/field marketing firm Blueprint Group, which needs to auto-enrol 700 employees by November 2013, has already introduced an executive PMI scheme this January as a direct result and is aiming to introduce life and income protection cover next year – probably starting with senior staff and eventually extending them to the whole workforce. Suzi Walker, HRD at Blueprint Group, says: “Because we


haven’t had many benefits, auto-enrolment has made us pull our finger out and realise just having a basic pension scheme is not attractive enough. It is stimulating us to look at the area of benefits as a whole, because the board recognises the importance of an attractive recruitment and retention pack- age. The war for talent is back on, particularly in our industry of field marketing.” The increased engagement with retirement planning is


also boosting demand for corporate ISAs, even though they cannot currently be offered as part of pension auto- enrolment, because employers realise certain employees place great value on having savings that are accessible. Business process solutions provider Equiniti, which has


3,000 employees and a staging date of September 2013, made a corporate ISA available to all staff in December 2011. Clancy Murphy, group HRD at Equiniti, says: “Auto-


enrolment has made us think about what’s important about pensions and talk to employees about what they value. “This made us decide to offer them a corporate ISA at a


discounted rate, and the feedback on it has been positive. A dozen employees are contributing through payroll and


hrmagazine.co.uk


Auto-enrolment ou has made us pull


r finger out attractive enough Suzi Walker/Blueprint Group


having a basic pension scheme is not


and realise that just


KFC fl exes its muscles


On 1 April 2013, fast food restaurant chain KFC UK will be auto-enrolling around 4,000 staff in its pension scheme, and the exercise has had profound implications for its other benefi ts and reward systems. After engaging Lorica Employee Benefi ts to conduct an optimisation


exercise involving all its benefi ts and providers, KFC decided to introduce a fl ex scheme for salaried employees, to switch from hard copy to online reward statements and to introduce fi nancial modelling tools for pensions. As the fl ex scheme does not go live until next April, new product options are still under consideration. The initial intention is to offer more choice on existing benefi ts and to increase the choice of group risk products. At the moment, KFC offers life and income protection cover, but it is thinking of adding critical illness and personal accident cover and allowing employees to fl ex between them. But most decisions regarding the pension, which will sit within the fl ex scheme and offer the option of salary sacrifi ce, have already been taken. Craig Truter, total reward manager at KFC, says: “The choices around pensions are simply whether to be in or out and what level of contribution. But if we didn’t have the anti-inducement regulations, we might have given the inducement to fl ex down and go to a corporate ISA.”


HR Supplement September 2012 23


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