Pensions must form part of a wider benefits strategy, says Graham Boffey, managing director of corporate benefits, Aviva
“Reward is under scrutiny like never before,” asserts Graham Boffey, over a bowl of porridge at our 7.30am breakfast meeting. “Auto-enrolment is not only throwing light on the quality of pensions, but on the broader nature of benefits too.”
As the early hour suggests, Boffey is a busy man. He’s got a new job on his hands, having taken the reins as managing director of corporate benefits at Aviva in April 2012. In that role he instantly faces the challenges of implementing pensions auto-enrolment. And then there’s the small matter of a host of new products in the pipeline at Aviva.
All this could add up to a real baptism of fire. But while some might be buckling, Boffey is buoyant: “We’ve got a once in a generation opportunity to really make a difference,” he says. “This is a chance to start to bring back a degree of certainty in retirement that disappeared with the loss of defined benefit pensions.”
Of course, he is not saying it will be easy. “It is a significant challenge that lies ahead,” he says. “The nature of the conversation between employer and employee will be critical. The important thing is to get employees into the pension to begin with, then have clear, transparent conversations around what it will mean for them.”
According to Aviva’s recent Working Lives report into workplace benefits, employees surveyed said they appreciated bonuses above all other types of reward, with 36% of respondents citing it as their most valuable benefit. Pensions were the next most valued – but with half as much support at just 16%. It’s a communication challenge that seems only to be getting harder. So does he feel auto-enrolment can really succeed at a time when employees value cold, hard, instant cash above all else?
Boffey acknowledges pensions need to be part of a wider benefits strategy. “The broader reward platform has to evolve as well,” he observes. “If an employee has an issue with student debt, for example, what else is on offer to help? We are looking hard at that, by offering discounts on insurance products for example.
“Employers could also use a platform to offer 5% off individuals’ weekly or monthly food shop. That gets employees engaged so that they use the platform in the first instance. Do this, and we believe that eventually, staff will come back to other products there – ones they might not have thought were as relevant today because of other demands.”
Aviva is due to launch its new Work:Life benefits hub in the summer and its Life Planner tool in September. Both are designed to help employees improve their long-term savings. Boffey believes products such as these are an essential part of any workplace benefits strategy. “It’s not enough just to give someone an indication of where they might end up,” he says. “It’s about giving individuals the chance to do something about it, there and then.”
One by-product of taking a more holistic approach to savings at work is that it brings the workplace closer to individuals’ personal financial planning. It assumes employees will trust their employer sufficiently to involve them more closely in their broader finances. Boffey thinks this degree of trust will happen, although he accepts it needs to be handled carefully: “The issue of trust is one I think about a lot. When you put someone into a pension scheme, something changes in the relationship between the employee and employer. There is the opportunity here for greater trust – but I’m not naive enough to think that is always a simple change.”
HR professionals, Boffey believes, have a central role to play in making sure this shift in relationship is a positive one. “The HR department is best placed to see the effect financial education has on the organisation and on the individual employees. Potentially it’s a massive opportunity for staff to get the help they need.”
The legislative juggernaut that is auto-enrolment could easily eclipse all other debates around reward for the next few years, but Boffey is unconcerned about this. “It’s easy to get that feeling. But within companies themselves, I suspect it’s not the be-all and end-all. They will still be thinking fundamentally about recruitment and retention in the toughest environment they’ve ever experienced.”
And despite these concerns about the economy Boffey still thinks employers will not skimp on how they fund auto-enrolment. “There is an opportunity to get something really right in respect of the reward and performance of the business. I suspect this will start off first as a ‘do-no-harm’ approach and then move more towards a ‘how-can-the-employer-help,” emphasis. The important part is to get individuals into the scheme, then once they’re in, you’ve got the potential to change the way they feel about reward more generally.”