When law firm Herbert Smith Freehills was approached about taking part in the living pension pilot, it was keen to support what it saw as a vital initiative not just for its own employees, but for society in general.
Operating from 25 offices across the Asia Pacific, Europe, Middle East and Africa, and North America regions, the firm has been a long-term supporter of the Living Wage Foundation, which has now established the living pension initiative, and has been a living wage employer since 2012. It decided to become an accredited living pension employer to provide greater financial security for its 5,000 employees.
The living pension voluntary savings target is 12% of a worker’s annual salary. Herbert Smith Freehills will pay in at least 7% and can also implement this as a cash amount based on 12% of a real living wage worker’s salary. By having a pounds and pence target, the firm hopes staff will find it easier to understand if they are hitting this or not.
As an employer, implementing the living pension made sense because it aligns with the firm’s values around financial wellbeing and is a meaningful pension savings target that employees can engage with, explains David Perkins, HR manager, rewards and benefits at Herbert Smith Freehills.
“Being a responsible employer is about more than ensuring staff are looked after while they work for you, it is about recognising that providing employees with stability and security in retirement is just as critical,” he says. “The living pension is important because the reality is that most people do not know how much they need to save for their retirement. There are a number of existing standards designed to try and help people work out how much they might need to save, but most are focused on the income people are likely to need in retirement.”
Although Herbert Smith Freehills has only had the initiative in place since March, it has already received positive feedback from a number of employees who now understand more about their pension and will be increasing their contributions to benefit from the living pension rates. It also carried out analysis across its entire pension scheme membership and discovered that there are hundreds of other employees who would benefit from increasing their contributions and see an improvement to their long-term financial security and wellbeing.
Even after just a few months, the firm has seen that the living pension has the potential to be very effective for its workforce, adds Perkins.
“Our hope is that this initiative continues to generate higher levels of engagement with pensions and we continue to provide support and education for employees around their pension options, so they can ensure they are making the right choices for themselves,” he concludes.