Kingfisher plans for 30% auto-enrolment opt-out

The home-improvements retailer is also developing an online financial planning tool to reach out to the 13,000 new members it will be enrolling. 

A high number of part-time workers and diverse age range of employees has meant the take-up in the defined contribution plan has been low, and consequently the scheme is anticipating around 3,900 opt-outs.

Simon Kirk, systems project manager, said in a discussion for the upcoming Data and Technology for Employee Benefits report by Clear Path Analysis: "Auto-enrolment is our biggest challenge.

"The significant volume of employees coming into the scheme will be a strong test of our scheme's processes and procedures."

The Volvo Group UK Pension Scheme is also streamlining its payroll and administration systems as only 40 per cent of workers are enrolled in its money purchase scheme.

The car manufacturer's scheme is battling with making its administration cost-effective, while communicating with its different employers and coping with a high level of staff turnover.

Schemes unable to manage auto-enrolment and opt-outs risk falling foul of regulations and incurring fines from the Pensions Regulator.

Efficiency in payroll, human resources and administration systems can reduce this cost as well as help manage the risk of members failing to understand the changes.

Kingfisher's opt-out planning

Kirk said Kingfisher would focus on enrolling workers quickly and reducing the level of queries to the administration team by promoting efficiency and accuracy in the various administration systems involved.

He added: "With auto-enrolment driving up membership, it is essential we get this right.

"Getting to a good level of efficiency will drive down costs and ultimately protects the benefits being offered."

The scheme uses online materials to educate and engage members. It is also developing a tool to help members track the progress of their retirement planning and consider the impact of life events such as divorce.

Kirk added: "The problem we face is we cannot apply one kind of technology for all of our membership, as we still have a number of employees who have limited or no access to the internet."

In January, schemeXpert.com reported that Kingfisher was planning to put the opt-out process on its trustee website to keep it independent of the sponsoring employer.

If you request too much information in communication, it could be deemed a blocker in opting out

John Harding, PwC

The auto-enrolment challenges being worked on at Volvo pension scheme included how to spread the cost across a number of employers and the uncertainty around what will happen to a worker's savings pot when they change job.

Nick Wheeler, chairman of the trustees, said the interface between human resources and pensions administration was crucial. He also recommended "clear lines of communication" between these groups as the new duties come in.

He added: "With auto-enrolment there is a shift in the balance of power for pension matters with more day-to-day responsibility passing to the employer."

The scheme's online system allows members to process a number of changes to their benefits from changing their address to switching investment funds.

Wheeler added: "Online facilities will have a big role to play both in cutting costs and in improving overall performance."

For some of its final salary schemes, Volvo has started a major reconciliation of guaranteed minimum pensions in a bid to improve its data before moving it online.

How to manage your opt-outs

There are a number of potential trouble spots for employers and schemes in the opt-out process.

John Harding, director in human resource services at consultancy PwC, said schemes need to watch they did not make opting out too arduous.

He said: "If you request too much information in communication, it could be deemed a blocker in opting out."

Especially for retailers with multiple outlets, employers may need to make sure the opt-out forms are reaching them in time for them to be reviewed.

Harding added: "Workers who want to opt out might simply give their forms to their line manager in their store.

"[If the] manager then sits on it for a period of time, it could be that causes internal problems."