> Pension Funds Insider> Co-operative Group extends pensions offering for auto-enrolment
Following a widespread review of its retirement benefits ahead of auto-enrolment, the Co-operative Group, the UK's largest mutual business owned by its customers, announced it will offer its career average 'Pace' scheme to all of its workers.
The Co-op, which is the UK's fifth biggest food retailer and an increasingly major financial services provider said it would enrol 40,000 of its 100,000 employees who do not currently contribute to a workplace pension from early 2013.
The new entrants will join the defined contribution (DC) section of Pace. Automatically enrolled employees will also be eligible to join the defined benefit (DB) section of the scheme, subject to completing two years' company service.
Another change which is taking place at Pace and which will come into force from October is that the employee contributions within the DB section will increase from 6% to 8% of their salary. The Co-operative will pay the balance of costs, currently 16% of pensionable earnings.
The Group expects to contribute £167m to its pension schemes in 2012. According to the latest data obtained by Pension Funds Online, the scheme currently holds assets worth over £6bn. Legal & General will provide administration services for the DC section of the scheme.
"Our pensions review was driven by a number of factors," Gary Dewin, director of pensions at the Co-operative Group said. "These included offering more choice to employees, a desire to make benefits fairer for all, as well as making them appropriate for employees in different situations. At the same time we wanted to ensure that our pension scheme remains an attractive recruitment and retention tool."
Dewin added that another drive for change was that due to a series of mergers and acquisitions the group ran a wide array of pension arrangements which provided inconsistent benefits.
"We believe these changes will enable us to provide pensions that will be both affordable to our employees and appropriate. From January 2013 the Group has to automatically enrol around 40,000 employees into a pension arrangement. We needed to take action now to be able to continue to offer good pensions for all our employees in the future."
Pace was recently awarded the Pension Quality Mark (PQM) which recognises good quality DC schemes.
First published 27.06.2012
29 June 2012
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