1. Auto-enrolment Case Study 24 October 2012 Carol Young – HEINEKEN in the UK Pensions Manager

2. Carol Young Pensions Manager HEINEKEN in the UK DC Plan: launched in July 2011 c. 2,100 active members DB Plan: c. 41,000 members £2.4bn assets HEINEKEN in the UK UK’s leading beer & cider producer Heineken®, Foster’s, Strongbow, Bulmers, John Smith’s, Kronenbourg 1664 c2,100 employees across 7 main sites 1.2bn litres of beer and cider p.a. Managing 1,200 UK pubs 3 separate payrolls Some background

3. The pensions challenge at HEINEKEN in the UK Our aims and principles How we engaged employees Launching our DC plan Outcomes so far Steps remaining Learning Outline

4. The pensions challenge An unsustainable risk to our business To do nothing was not an option! An unsustainable risk to our business To do nothing was not an option! Existing DB Scheme £570m Deficit £1bn Deficit? 2009 2012 c. 42,000 members c. 2,300 actives 2008: Heineken acquired Scottish & Newcastle Recovery Plan Up to £61m p.a. additional employer contribs. £50m accelerated contributions Your aims and drivers may well be different but an insight into our journey might still help in your planning

5. HEINEKEN’s aims and principles Requiring a solution that was: Sustainable Competitive in the market place Centred on informed choice “Future Proofed” for Automatic Enrolment A “must do” business project Not an HR project Top level buy-in & active involvement A “must do” business project Not an HR project Top level buy-in & active involvement Engagement Comprehensive and 2-way Colleagues Representatives HR Managers

6. Engagement Understand Why Heineken is doing this How it will affect me How do I get further information/support Accept Short term: Change is inevitable but Company support remains Approach is well considered New DC is a quality scheme and flexible Realistic and measureable communication objectives: Medium/longer term: New DC is valuable, fair and well governed The need to take responsibility for own retirement plans Critical for meaningful engagement Underpin all subsequent activities

7. Planning & engagement to launch Gradual build, multiple iterations and follow-through support Q3Q4Q1Q2Q3 Holding Position & Building Awareness Organisational Readiness Ongoing support Formal Consultation 20102011 Education & Sign-up DC LAUNCH Acceptance Understanding Budget Setting & Provider Selection Q2

8. Engagement: your provider can help Multiple channels: in workplace and at home PLUS face to face What will work best for your members?

9. Outcomes: Launch Group 94.4% The overall take up rate 50 Only 50 colleagues from our DB  DC group chose not to join <15% Opted for lowest initial contribution >70% Started at highest contribution level or are tracking towards it Only 52 Colleagues defaulted to Balanced Lifestyle (didn’t tick anything) >11% Chose core fund or full fund range The Rest Made an active choice across 3 lifestyle profiles Take-up Contribution choices Investment choices

10. No complacency! Enrolled automatically through offer letter and Contract of Employment flyer – explains default options and how to make changes Take up still high but we have to keep working at it…. …less evidence of active engagement with details – more default decisions than for launch population 10 Enrolling our population post launch Finessing the Engagement Strategy Pensions training at new start induction courses Where employee “opts out” the pensions team issues a letter reminding of benefits given up All information available via our HR Portal Remind colleagues of providers support and information available online and by phone

11. Colleagues’ views “For the first time I feel I understand the basics about pensions. It’s not always good news, but now I feel able to start planning for my own future.” Contact Centre colleague, Livingston “There was a lot to take in but it helped me make a positive decision about my future pension.” Production colleague, Hereford “The company came across as open and keen to explain the facts as clearly as possible.” Sales colleague, Edinburgh

12. Steps remaining to staging date We have a great base but there’s still work to do! Q2Q3Q4Q1Q2 Design & agree detailed processes & governance Payroll vs. provider solution? Q3 20122013 Final testing HUK Staging Date Go Live Preparation Organisational readiness incl/comms Annual renewal Review

13. Learning agreed objectives coupled to the right project structure Buy-in from the very top to build real understanding – crucial to informed choice Taking the time start preparing early – will be a business wide project Payroll set up is key to success Effective 2-way communications key to building member engagement and confidence Next