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Case study: McDonald’s

McDonald’s is the biggest family restaurant business in the world, serving over 3 million customers a day in the UK alone. Their head office is based in London and the company employs 37,000 people in the UK, made up of approximately 35,000 hourly paid employees and 2,000 salaried employees. In addition to this, there are a further 57,000 employees working in franchised restaurants throughout the UK. The payroll system used is Northgate, and the HR system used is Oracle.

Being quite a paternalistic employer, McDonald’s did not wish to simply deliver the bare minimum in order to satisfy its statutory auto enrolment obligations as an employer. Careful consideration was given to how best to serve their employees based on their demographic and likely previous pension experience. Furthermore, McDonald’s was very keen to make it as straightforward as possible for the franchisee population to ‘plug in’ to the existing process.

One of McDonald’s core principles was that existing contractual pension entitlements were to be maintained for salaried employees. The auto enrolment minimum contributions should then become the entry level for the scheme with members being given the option to ‘opt up’.

In addition, hourly paid employees with no previous company pension entitlement were to be taken on a communications journey internally prior to the launch, using various existing channels to drip feed information.

McDonald’s simple ethos through the whole project was to keep it simple – to acknowledge that auto enrolment and pensions are complex subjects for many of their employees. Any decisions employees have to make were to be kept as straightforward as possible and employees were to be equipped with the necessary tools in order to make those decisions.

The team at McDonald’s was quick to recognise that the only way to make auto enrolment work successfully was through automation. A project team was put together including representatives from McDonald’s, the pension and payroll providers and BenPal and with only a relatively short timescale until the staging date, BenPal proved a key contributor to the success of the project.

BenPal has provided McDonald’s with a tool for delivering statutory and non-statutory auto enrolment communications to all affected employees as well as an online system for the salaried employees to manage their pension; to opt in and opt out; and also to enable payroll to stop, start, and change contributions.

McDonald’s has experienced a low opt out rate so far. Four months after staging only 3% of the auto enrolled salaried employees have opted out, and only 2.4% of auto enrolled hourly paid employees have opted out. Furthermore, more salaried employees actually ‘opted up’ in the first week than opted out.

Feedback to date from employees on BenPal has focussed on how easy it is to use and understand. So much so that the McDonald’s team now plans to extend access to BenPal to the existing members of the Stakeholder pension scheme to provide them with an even easier way to manage their pension benefits.