Use Case: Restructure Retirement Reward
2021-12-20
Issue
In line with many large firms, the Client needed to restructure and standardize its pension reward package for all UK employees, to control the excessive rising cost of the existing Defined Benefit pension scheme. In the past few years, the costs had risen by 75% and would be unsustainable at that current rate. Consequently, the decision was taken to close the DB scheme to new members and the pension provision for existing members was revised. A new DC scheme was introduced for both new and existing employees.
In addition, the Client wanted to introduce a flexible benefits envelope which gave employees the option to invest the money in either their DB pension, a DC pension, or use it as a top up to a life assurance fund or as extra take-home pay.
Barrier
This posed an enormous problem to the client since these employees received an array of different reward offering and structures.
Even simple changes to reward can be extremely difficult to communicate successfully, but changes to the pension were likely to lead to very strong feelings and with so many variables and choices, the risk and consequences of miscommunication could be catastrophic to employee motivation and extremely costly.
Two major problems:
- How to accurately and communicate the impact of these changes to in-scope employees to achieve a positive reception.
- How to capture the choices made by employees and reflect those changes in the underlying HRIS (Workday) and ultimately to payroll.
The complexity of the changes and potential variance depending on choices and performance meant the only way to successfully communicate this change without an online tool that could model various options would have been via one-to-one discussions. The production of the materials and delivery of the communication would cost millions of pounds.
Solution
Every employee impacted by the change was invited to use the uFlexReward platform to model their choices and assess the impact on their personal financial position before selecting the best option for them. There was no requirement for a costly communications exercise – all employees could see the actual impact to their individual reward from within the uFlexReward platform. By modelling the options available, employees were presented with a revised Total Reward Statement showing all reward components alongside their existing Total Reward Statement.
The uFlexReward platform was used to show these employees exactly how their reward would change, in a consistent and familiar way, across every single unique package. It allowed the employees to model how performance (individual and business) would affect every aspect of their total reward package. This eliminated the need for one-to-one conversations.
The choices made by the employees were captured in the uFlexReward platform and passed to Workday via an automated, secure integration. Once in Workday, any changes to pay were passed onto the payroll system.
Benefits
The Client achieved the reduction and elimination of an unquantifiable, open-ended liability that had the potential to undermine the pension fund and even the financial viability of the firm. With the interactive online communications feature of uFlexReward, the Client was able to maintain morale and output against the serious risk of resistance and conflict seen in other organization with such significant changes. Overall, the client was able to demonstrate significant cost savings both from the plan change and a more streamlined online communications process via the tool.
Subscribe to our Blog & Newsletter
