Many employees haven’t a clue about the details of their pension. What they contribute every month, how much they will have saved for retirement and what it means if they want to retire early, for example. As an employer, it’s a good idea to give this pension awareness a boost. We explain why this is the case in five questions.
1. Why is pension awareness so low?
Everyone knows that pensions are important. In fact, it’s about the income people will get when they stop working, and this involves an enormous amount of money. Nevertheless, the majority of Dutch people do not consciously pay attention to their pension. Surveys about this topic conducted at BeFrank in recent years show this to be the case time after time,
which is fairly logical. A 22-year-old recent university graduate is more interested in paying off their school loans and saving for a home than in a fund that cannot be touched for almost 50 years. And for a lot of people the concept of pensions is something abstract, something that will not be important until far in the future. At BeFrank, we try to increase this awareness by making pensions simple and fun, with smart tools and communication in plain language.
2. What are the consequences of the arrival of the new pensions system?
The new system will be more transparent and individual. Everyone will accrue their own savings, and the contribution will be age-independent. Employees will also be able to freely withdraw 10% of the money they have saved when they retire. Furthermore, there will be fiscal benefits for employers when they allow employees to retire early, if these employees wish to do so.
This makes it even more important for people to actively begin thinking about their retirement provision. It really is too late to only start thinking about this when the retirement date is near. You won’t be able to change much at that point.
3. Why is the pension awareness of employees also a matter for employers?
Good employment practices are important; you have a duty to care and want to be there for your people. In addition to issues such as a fair salary, a holiday allowance scheme and a good workplace environment, a pension is also an important employment benefit. It creates financial peace of mind, also for later.
It is, therefore, all the more important to partner with a pension administrator that provides correct information 24/7; in clear language and with an easy-to-follow online dashboard. Because you can only influence your own pension if you understand it; by adjusting your contributions or investment risk, or example. You can hence also see the pension as one of the ways you, as an employer, can make the difference in order to recruit the right talent. Just like you do this by offering flexible hours, a good workplace environment and training opportunities.
4. What can employers do to raise pension awareness?
As mentioned above, pensions are an abstract concept for many people. Therefore, you should choose a pension administrator that doesn’t make things unnecessarily difficult. At BeFrank we keep it simple, in any case. With short text, clear icons and images, when possible. For example, all of our new participants receive a personalised welcome video that explains exactly what they can expect from their pension.
It also helps to give your employees easy access to their savings for later. BeFrank has a useful app, so employees have all their important pension information close at hand. How much is currently being contributed? How much have I saved so far? What can I expect from my pension later? What will happen to my pension if I want to retire early or decide to contribute more money? The app has immediate answers for these questions. We also have such an online environment for the HR department, ensuring transparency and that every change can be easily processed.
You can also mobilise employees by asking them, in a pleasant way, to pay attention to their pension. At BeFrank, we’ve already visited many companies in order to help employees navigate their own online dashboard, thus literally helping them cross the threshold. All of this isn’t possible now due to the coronavirus, which is why we’re doing it online.
5. Do the tips and tools really help?
They certainly do. They make the pension more tangible for employees, mobilising them, as it were, to make the right choices at the right time. At BeFrank, this is reflected in the log-in frequency. More than 70% of our participants check their pension overview from time to time, which is an incredibly high percentage.
This article appeared on MTsprout.nl on 20 January 2021.