Plum revolutionises members' savings

October 2007

Plum Financial Services Limited (Plum) is revolutionising the super savings behaviour of its corporate members with its award winning Escalator Program.

The initial results are in for one of Plum's long standing corporate clients, with 85% of employees now voluntarily contributing five per cent or more to their super, following the implementation of a version of Plum's Escalator Program within the company.

Launched just last year, Plum has been in the process of implementing varying versions of the Escalator Program, to suit the needs of each client, over the past few months. The Program also won an Excellence Award for member marketing and the distinguished 'Alchemist Award' for innovation at the recent Association of Superannuation Funds of Australia (ASFA) 2007 Communications Awards.

The Program can be offered on an 'opt out' basis, which uses behavioural finance theories to encourage members who are unlikely to take action for themselves to save more, an 'opt in' basis, or a combination of these. (see Escalator Program Quick Facts below)

According to Plum's Managing Director Mike Fitzsimons the results from Plum's first client to implement a version of Escalator on an 'opt out' basis, have blown Plum's expectations out of the water.

'In conjunction with our client Hastings Deering, we facilitated rolling out a program to assist those members of their employee base who weren't already making voluntary super contributions (around 40% of members). The program highlighted that voluntary contributions would be increased to 5% unless the employee instructed otherwise, Mr Fitzsimons said.

'Hastings Deering now has 85% of its entire member base making voluntary contributions of 5% or more to their super! This is a fantastic result and industry ground breaking.'

Hastings Deering chose to implement the program on an 'opt out' basis, meaning employees were asked to choose only if they did not want to participate in the program. New employees will automatically join the program unless they specify otherwise.

'We knew when we started Escalator that the 'opt out' version of the program was likely to be more effective to help members save, than the 'opt in' version, based on the US experience of a similar program called SmarT. We also knew the behavioural finance theories on which it is based are sound,' Mr Fitzsimons said.

'Having only piloted an 'opt in' version in Australia, we knew we would have to wait and see whether the 'opt out' version would have the same results in Australia… we know now it can help put our members in a much better position to have an adequate income in retirement.

Hastings Deering Managing Director Scott Cameron said the company had implemented the Program, in conjunction with Plum, to encourage and support employees to save and prepare for their retirement.

'We wanted to help our employees avoid being put in the position of not being able to retire on an adequate income,' Mr Cameron said. 'We are very supportive of saving through super, so that our employees can enjoy their retirement years.'

'Implementing initiatives such as this savings program will help make our employees retirement lifestyles above the average, and improve our standing as a caring employer.'

Mr Cameron said Hastings Deerings chose a full 5% voluntary contribution program to get staff closer to the 15% that the super industry and the government are saying will be required for people to have a comfortable retirement.

'Employees were a little hesitant at first but after attending education sessions they obtained an understanding of the program and the need for people to save more, they were then more comfortable with putting more contributions into super. In fact some members commented "thanks for making this decision for me as I can see the benefits it will have on my retirement",' Mr Cameron said.

New Hastings Deerings employees will also automatically go onto the program.

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