A case study – Nationwide Building Society Ian Baines Head of Pensions

Nationwide Building Society The world’s largest building society… The UK’s second largest mortgage provider One of the largest savings providers Major provider of current accounts, credit cards and personal loans 15 million customers and members – no shareholders Over 700 branches across the UK Around 18,500 employees and a head office in Swindon

PRIDE The way we do things… Putting our members and their money first Rising to the challenge Inspiring Trust Doing the right thing in the right way Excelling at relationships PRIDE drives our employee recognition – and once a year, we celebrate our true PRIDE superstars

Summary of employee pension arrangements Nationwide Pension Fund – DB Closed to new members but open accrual c6,000 current employees are members Nationwide GPP with Friends Life - DC Open to all employees & used for AE c12,000 Employees not making pension savings c600 i.e. 3% The key challenge we identified in 2014 Despite higher matching contributions most employees in the GPP paid minimum contributions i.e. likely poor outcomes

DC enhancements – 2015/2016 Old DC benefit design Life assurance of 4 x salary 2 year vesting for full ER contributions Core 9% ER contribution (5% if < 2 years) Core 4% EE contribution set as default plus ER additional matching up to 3% New DC benefit design Life assurance of 8x salary No vesting Core 13% ER contribution No change to ER matching conts but EE cont. default reset in January each year at 7% Incapacity benefit of 2x salary

Three Phase Engagement - 2015/16 Education & Awareness: March /April 2015 – Don’t just dream it, Plan it! campaign: People Manager communications – Employee Pensions team led workshops, tool kit for delivering a pensions team briefing session Team Briefs (launch of poster competition), News stories, LIVE mag, Twitter feeds, Branch energisers and Huddles Introducing the changes: July 2015 Changes announced via news stories, Manager roundups, segmented group direct communications, Film Implementation of the changes: September Series of ‘Youchoose’ communications regarding Additional Contributions messaging Follow up communications reinforcing messages to ensure employee understanding

https://www.youtube.com/watch?v=52dPqzeAQOI&sns=em

Results Employees in GPP paying > 4% core EE cont. up from c9% (end of 2014) to c90% (January 2016) and is currently c84% Employees in DB paying AVC's increased from c8% (end of 2014) to currently c11%. General increase in employee engagement e.g. logging on to websites, attendance at seminars, staff surveys etc. Employees not in DB or GPP fell from c5% (end 2014) and is currently c3%

New Nationwide Pension Fund website launched Follow up communication iniatives – DB/NPF New Nationwide Pension Fund website launched Introducing new interactive member communications & annual newsletter Greater use digital information for all members – current employees, pensioners & deferred pensioners

Follow up communication iniatives - GPP Encouraging employees to “own” their pension savings, manage their investments and focus on their target income at retirement

Conclusions Behavioural “nudges” can definitely work in increasing pension contributions. A good communication strategy is important but it shouldn’t all be about the numbers and logic it also has to focus on emotional levers e.g. “ Don’t just dream it plan it!” campaign. Support from the business and alignment with business goals and culture is essential. As is support from other key stakeholders e.g. staff union. It also helps to have a great pension provider (Friends Life) and a great adviser (Hymans Robertson). And the Secret to Good Employee Engagement is ….it’s never finished!