What kind of employer do you want to be?

BeFrank
14 Dec 2021

The Pension Agreement will continue to receive public attention in 2022. This is a good thing, since the changes to the pensions system provide an opportunity to take a close look at your HR policy and to make it even better. Pensions as a steering tool – how wonderful is that?

There is no point in panicking at the thought of all the choices you have to make to futureproof your pension scheme. There is no need. Firstly, because the Future Pensions Act (Wet toekomst pensioenen) has not yet been finalised. Some parts still need to be worked out further. Secondly, and much more importantly, the issue of pensions actually starts with the much broader question of what you want to offer your employees. It is better to focus on that before you start delving into scales and transitional arrangements. It is the most logical and most useful first step. What’s more, you can take that step today so that you can start talking to your employees about it tomorrow.

Terms of employment without tears
I started my career in HR, where the topic of terms of employment often led to emotional discussions. There were almost wars over the price of a cup of milk in the restaurant, or the colour of the lease cars. The emotional investment in terms of employment is high. But the appreciation for the employment term of a pension is very low, even though it is the most expensive component after the salary. Oddly we accept that as an employer we put a lot of money into a pension scheme, while we get almost no appreciation for it. We can do much better.

Bringing pensions closer
To turn this around, you start with the basic questions: what is our ambition, what sort of company do we want to be? Many companies are busy digitising and preparing for the future. This includes asking yourself what you stand for, what your HR policy is and what terms of employment package is appropriate. This is where the pension scheme automatically enters the picture.

We notice that employers are already looking at pensions in a very constructive way. But they could still do with a push to start talking about it. One barrier in this regard is that in the past, pensions have been made far too complex. This has pushed the subject further away instead of bringing it closer. Even though getting people involved with their pension is important for the future of both the employer and the employee.

Clear and simple
So how do you do go about this? Communicating in clear language is the first step. It already makes a big difference if employees always have an overview of their pension in an app. Secondly, keep it simple. The experts like to go into all kinds of details, but an employee has simple questions like: what has my employer arranged for me? The responsibility is increasingly falling on the shoulders of the employee. This is no surprise, since the whole of society is individualising. Everyone wants to decide for themselves where to go on holiday, so why shouldn’t you have a choice about your own pension?

If you communicate positively about it and involve the employee, suddenly they will have much more insight and influence over their own pension and can decide what they will need in the future. On this basis, they can decide how much risk they are willing to take on and whether they want to make extra contributions. There is a difference between a campsite in France and a cruise ship in the Caribbean, and between a rented house and a one which you own with no outstanding mortgage. By involving your employee in their own pension now, you make them conscious of their financial future. And it really isn’t as complex as we think.

Pensions are more fun than expected
A pension is salary for later. Once you present it like this and start the conversation with your employees, pensions become a lot more interesting. Employees find it much more fun than they thought to be involved with their pension. As long as you keep it transparent and simple. Of all the participants who are accruing their pension with us, 80% are involved with their pension. This means that they can see their pension in the app. And it turns out that appreciation for the employer, the pension and the pension administrator increases strongly the more employees are involved. That challenging and difficult subject is suddenly easily accessible online. This gives a sense of control. Even if you simply help the employee to log in to their own pension environment and explain what has been arranged, satisfaction increases by 50%.

Weapon in the war for talent
Older employees are naturally more engaged because they are closer to retirement. But we are seeing that young people’s involvement is growing rapidly. This is due to two factors. The first is that they are already very familiar with investing. The second factor is that young people find the topic of sustainability important. What kind of world do I want to live in later? That is a question young people are asking themselves. You should therefore pay attention to sustainable choices within the pension accrual. After all, engaging young people is a necessity in the war for talent: the top graduates coming from the universities pick the company where they want to work. They make demands in terms of responsibility and purpose: do I believe in what this company does? Sustainability is becoming increasingly important. You can capitalise on that by making your pension investments green in such a way that it becomes part of your proposition. Thereby making it a weapon in the war for talent. Make sure, though, you communicate clearly here as well. For example, show what a choice means in terms of carbon reduction compared to the benchmark. This brings pensions closer to the employee.

Forget the idea that pensions are complex and uninteresting for your employees. And forget the idea that pensions are a burden. On the contrary, they are a steering tool. The talent you need so badly can be attracted with good terms of employment, and pensions are a natural part of that. We are even noticing that many young candidates want to work for us, precisely because a pension has a purpose for them: it is meaningful. Who would have ever thought it? All the more reason to start working hard on pensions in 2022!

This article appeared on PWnet on 14 December 2021.