Royal Bank of Scotland has seen 40 per cent of staff opt-out of auto-enrolment after it became the first company in the UK to apply the new rules to its workforce.
The 15,000 staff at the bank who were not already in a scheme have been enrolled in RBS’s defined contribution scheme in line with auto-enrolment rules which will be rolled out from October.
The bank gives employees an extra 15 per cent of their salary that either goes into their pension or can be taken as cash.
Until this month, if employees made no decision on what to do with the extra money within three month of joining, they would have been automatically enrolled into the bank’s pension with 4 per cent being paid into the scheme and the rest being tacked on to their wages.
Now, if staff do not make a decision, the bank pays a 2 per cent contribution to their pension, equivalent to the 1 per cent employer and 1 per cent employee contributions required at the start of auto-enrolment, with the rest taken as cash. Employees can choose to contribute any proportion of the extra money above the 2 per cent required by the auto-enrolment rules and take the remainder as cash.
So far, 40 per cent have chosen to opt-out entirely and take the 15 per cent cash.
The 2 per cent contribution will rise in future in line with the rules until it hits 8 per cent in 2018
RBS’s DC scheme has 27,000 members receiving an employer contribution of 4 per cent. It also has 42,000 members in its now-closed defined benefit scheme.