A generous pension and a financial education programme help to keep Calor Gas’ staff motivated

When Chancellor George Osborne made his earth shattering announcement in the 2014 Budget, schemes didn’t quite know where to put themselves. One year on, the reforms have come into force, but many companies still feel in the dark.  

It is hard enough facing challenges when you know what they are, but it’s the unknown unknowns that are keeping Adam Thompson, finance director at Calor Gas, awake at night. “It’s the uncertainty of where the biggest challenge lies,” he says.  


Calor Gas was set up in 1935 to provide energy for rural homes, but has since grown to become a major UK supplier of liquefied petroleum gas.  

Thompson believes it is important that the people who keep the British economy running are sufficiently motivated and rewarded. If this is going to work, they need to understand what the company is offering them, and what the new flexibilities mean for them. 

It’s the uncertainty of where the biggest challenge lies”

“I’d like it to be simple and clear for people – both companies and individuals. The rules must be simple and understandable,” he says.  

“There will be a few people who in the short term are affected by the pension freedom, but in reality this is a longer-term thing. It will have an impact on those people approaching retirement much more than those who aren’t – but everyone at some point will need to start thinking about it,” says Thompson. 

Scheme members are likely to have read about the new freedoms in the press and may have questions, but the majority won’t start thinking about the implications spontaneously. 

The importance of communications

That is why getting the communications right is so important. 

Calor Gas has a dedicated communications review team that meets quarterly. It works closely with consultancy Barnett Waddingham to devise strategies to explain how the scheme works and how their money is invested. 

“The challenge has always been getting engagement, particularly with people for whom retirement is a long way off,” says Thompson. “This is a massive hill to climb.” 

One of the difficulties is that it is hard to predict what members are going to do. “We’re working with Barnett Waddingham to understand the nature of the people in our scheme, because although they’re our staff, we don’t necessarily have a great understanding of where they are in terms of savings or plans for the future.” 

The challenge has always been getting engagement”

To combat this problem, Calor Gas is trying to profile its members so it can characterise them and think about which messages are most relevant to which sections of the workforce. 

“It’s not as simple as age – we’re also trying to understand people’s aspirations and plans,” says Thompson. “Ultimately I’d like to be able to put case studies in our newsletter to show what different choices have meant for different people in their lives, to give others examples of what they can think about.” 

The idea behind this is to personalise the pensions process and make people relate to pensions decisions and see how it corresponds to their lifestyles. 

When members come within five years of retirement the company is keen to start discussing their options with them to ensure they are aware of the choices they have and what impact that will have on their futures.  

Thompson says: “We’re not here to tell people what to do or steer them, we’re here to educate and give them as much information as possible. As a sensible employer, you need to be able to do that.” 

We’re not here to tell people what to do or steer them”

Communication goes right to the heart of why any company offers a pension scheme. For example, a scheme will not act as a retention tool if none of the staff know about it. “We want them to realise the benefit the company gives,” Thompson explains.

Going beyond altruism, this last point makes good business sense. Following the removal of the compulsory retirement age, employers are starting to become concerned about managing a cohort of workers who are past their peak but cannot afford to retire. 

Pensions are becoming an important part of business management in terms of making sure staff can leave when they are ready and younger workers can progress. 

“There’s a loyalty factor there… but there’s also a CSR [corporate social responsibility] element, because you want to make sure your people are doing the right thing for their future, so you haven’t a problem with a swathe of people who haven’t thought about it and who can’t retire at the point that you might want them to, or working until a very old age.” 

People have started to realise and up their contribution from 3% to 5%”

Calor Gas’ approach is to offer a generous contribution structure. 

When an employee has completed two years’ service, the company will double match their contributions up to 5%, so if the employee puts in 5% the employer will contribute 10, taking them up to a relatively sizeable 15%. The employee therefore only pays in a third of their ultimate pot.

“People have started to realise and up their contribution from 3% to 5% because we’ll double our contribution,” says Thompson. 

But even where the benefits can be expressed in figures, it isn’t always easy to persuade people to engage. “It’s really difficult, and we’re one of the more proactive companies in promoting the scheme.”  

A wider strategy

The energy supply company’s paternalistic philosophy is reflected across its wider benefits strategy, which it calls Reward @ Work. 

The benefits it offers are flexible, again showing a clear wish to separate out different types of workers and offer them incentives that are relevant and valuable, given their circumstances. 

Calor Gas has emphasised its commitment to providing generous workplace benefits through a statement on its website: “The health and wellbeing of our employees and their families is a high priority, as is their long-term financial position. 

Our rewards are therefore practical and flexible”

“Our rewards are therefore practical and flexible to meet the needs of the business in a highly competitive environment. They are also completely transparent so that everyone knows what we are trying to achieve, how and why.” 

Individual employers such as Calor Gas can do a great deal to help their members towards a decent retirement, but they need the support of the industry. “I hope the providers will come forward with some sensible, thought-through options for people. 

“Allowing people to consider a mix of annuity, drawdown and cash tells them that it’s not as simple as an annuity versus cash choice,” says Thompson.