GERMANY - Vodafone has become one of the first companies in Germany to introduce an element of flexibility to its pension plan.
Employees of Vodafone in Germany are now being offered more choice when it comes to their contributions and investment decisions related to their pension scheme, as a result of the move to defined contribution.
The introduction of flexible benefits has been realised through the introduction of an innovative web-based tool carried out by Watson Wyatt.
Vodafone wanted a pure DC plan and aimed to give its employees the opportunity for salary sacrifice, and to allow them to get returns from the equities market, explained senior consultant Marc Heine.
The company also aimed to introduce the life cycle model, whereby the asset allocation is dependent on the age of the employee.
Heine stressed that control over the administration of the scheme was vital to Vodafone and said this was accomplished through the implementation of the web-based tool.
Apart from making the choices more accessible to the employees, this online facility had a hand in the German tax authorities allowing the flexible scheme’s implementation.
When a company plans to introduce salary sacrifice, the authorities require it to provide the employees with the decision statement as well as the pension promise. In Vodafone’s case this was done via the web.
Heine said Vodafone employees had responded well to the introductionm of flex, adding that said they appreciate playing a role in their investment decisions.
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