The impact of retirement solutions on employee satisfaction and retention

Like "clothes make the man," employees make the company. Terribly cliché, but it really is true! As a company, you simply want to keep your best employees, and to do that, it's important to make sure they stay happy. An important but often undervalued aspect of employee satisfaction is the pension plan, in fact this is taken as a given by 90% of Dutch people. But did you know that only a third of the Dutch have a pension? And it is not only self-employed people who do not have a pension! Many employees working at companies of different sizes don't always have a pension either. In this blog, we discuss how modern pension solutions can increase employee satisfaction and thus retention.

But first, why is retention and employee satisfaction so important (besides the fact that employees make the company, in many cases, what it is)?

Structural labor market tightness

In today's tight labor market, finding suitable personnel is a major challenge. There are several factors contributing to this tightness:

1. More vacancies than unemployed: According to the UWV, there have been more vacancies than unemployed for more than two years, leading to a structural tightness in the labor market(UWV Particulieren). This means that employers have to compete harder to attract talent. Workers also have more options, so they keep looking around. 
2. Automation and technology: While automation and technology are seen as solutions, it appears that expectations about them are often too high. Automation and AI can take over many tasks, but they will not be able to replace all work(SD Worx). This means that human workers are still crucial for many jobs.
3. Work pressure and stress: Due to the shortage of personnel, work pressure is increasing in sectors such as hospitality, education and healthcare. This leads to higher stress and burnout complaints among employees, which further increases the challenge of retaining staff and attracting new staff(UWV Private Sector). 

Despite fewer jobs in the last quarter, the tightness in the labor market is structural, according to the UWV. 

But that's not the only reason you want to retain employees. 

After all, it costs quite a bit to recruit and onboard a new employee. An average of $4,700 according to The Society for Human Resource Management. On top of that comes $1,296 for training that new employee(Toggl Track)(Homebase). In addition, you also have to factor in the valuable knowledge and expertise lost when an employee leaves. In this regard, new employees are not fully inducted until 3 to 8 months have passed(Expert Beacon) (Homebase).

In short, the combination of a structural shortage of available candidates and the high cost of recruitment and onboarding makes it essential for employers to develop effective employee retention strategies.

How does a good retirement plan contribute to employee retention?

A good retirement plan can play a crucial role in employee retention within an organization. When employees see that their employer is investing in their future financial security, they feel valued and supported. Which increases employee satisfaction and reassurance. And lowers stress.

An attractive retirement plan can also increase employee loyalty and commitment. Employees who feel secure about their financial future tend to be more motivated and committed to their work and the organization. After all, they know they are in a good place and can build on the employer. On top of that, a good retirement plan can be a differentiator in a tight labor market that helps retain (and yes, secretly attract) talent. Employees often compare fringe benefits when making career moves, and a strong retirement plan can be a deciding factor.

Unfortunately, even though employees really care about pensions, the appreciation for them is not very high. Why is this?

Pension taken for granted by employees but undervalued

For many employees, retirement is an obvious employment benefit, but it is often undervalued. Perhaps you recognize yourself in this example: Lisa, a 35-year-old marketing manager, regularly receives information about her pension, but the complicated jargon and unclear statements make it difficult for her to understand how her pension is structured and what the projections are. Without a clear understanding, she views her retirement plan as less important compared to other immediate benefits such as bonuses, extra vacation days and even a gym membership.

This lack of understanding comes from the complexity and lack of transparency of traditional pension funds. Workers like Lisa do not know exactly how much they have accrued or what their money is invested in, making it difficult to assess the value of their retirement plan.

How can you ensure that employees are more appreciative of retirement?

To ensure that employees like Lisa are more appreciative of their retirement plan, there are several strategies companies can employ:

Provide transparency

Employers can provide user-friendly apps and platforms that give employees real-time insight into their pension accrual. If Lisa can use an app to see exactly how much she has accrued and how her money is being managed, she will be more appreciative of her retirement plan.

Improve financial education

Providing employees with educational resources can help them better understand how retirement savings works and the benefits it provides. This can be done through workshops, webinars or informational sessions, for example. If Lisa better understands how her pension works, she will appreciate it more.

Flexibility and personalization

Give employees the ability to customize their retirement plan according to their individual needs and goals. Lisa would like more control over her retirement investments and the ability to customize her plan according to her life stage and financial goals. Also, uncertainty about what will happen to Lisa's retirement if she leaves her current employer is a question she is asking herself. 

By applying these strategies, employers can significantly improve employee satisfaction and retention, ultimately contributing to the success of the organization.

Save on employee turnover by investing in modern, transparent retirement solutions

Employee retention is crucial in today's tight labor market, where finding suitable personnel is becoming increasingly difficult. A good retirement plan can make a significant contribution to employee satisfaction and retention. Transparency, financial education and personalization are key to making employees feel more valued in retirement. When employees feel supported by a good retirement plan, their satisfaction and loyalty increases, resulting in less turnover and lower recruitment costs. Investing in modern retirement solutions is therefore a strategic move for organizations looking to retain and motivate their employees.