By Ilonka Oudenampsen
Fidelity Worldwide Investment Germany’s new DC plan with an auto-enrolment feature has seen an opt-out rate of only 15 per cent, the firm said.
After the acquisition of fund platform FFB in 2008, 80 per cent of its employees converted their DB pension savings into Fidelity’s new DC plan, while new employees who are starting this year will also be in the new plan. Launched in January, the plan comes with an auto-enrolment feature, which the firm called a very new concept for Germany.
When auto-enrolled, the employee will pay 4 per cent of their gross salary into the fund, which the employer will then match. However, employees can opt out, opt up or opt down on a monthly basis.
The money is invested into a life-cycle concept, which is managed by the firm itself. Fidelity Worldwide Investment Germany managing director Klaus Mössle explained that the employer believes it is the best product, as it is the company’s core product for pension schemes.
Of those employees who converted into the new plan, 60 per cent accepted the auto-enrolment as it is, 15 per cent opted out, and 17 per cent opted down to one per cent, which is the minimum contribution to get the additional payment from the employer.
“The remainder fine-tuned, very interestingly, to 2 per cent or 3 per cent, so they really must have sat down at home and discussed how much can I afford to defer. So that in a way makes me very happy, because exactly this kind of involvement of the employees, that was one of the primary goals. While in the past they didn’t sometimes even know exactly how this whole thing worked, the corporate pension concept, they now really sit down and do their fine-tuning,” Mössle said.
However, he also stressed that 60 per cent accepted the auto-enrolment as it is and did not make any changes or opt-out.
With regards to the Fidelity employees who did not previously work at FFB, they are now receiving communications about the new plan. Mössle explained: “They were informed by different colleagues who have worked on this pension plan and then everybody got an overview not only with their lock-in data for this new online administration platform, but also with calculations for each, depending on how much you earn, so everybody got his own calculation of what would make sense to compare both plans, the old plan and the new plan, so that they really can decide until the end of June if they want to change or not.”