The impact of pension solutions on employee satisfaction and retention

Just as “clothes make the man,” employees make the company. Incredibly cliché, but it's really true! As a company, you simply want to keep your best employees, and for that it is important to ensure that they remain satisfied. An important, but often underestimated, aspect of employee satisfaction is the pension scheme, as this is taken for granted by 90% of Dutch people. But did you know that only a third of Dutch people have a pension? And it is not only the self-employed who do not have a pension! Many employees who work at companies of various sizes do not always have a pension either. In this blog, we discuss how modern pension solutions can increase employee satisfaction and thus retention.

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

Structural labor shortage

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

1. More vacancies than unemployed people: According to the UWV (Dutch Employee Insurance Agency), there have been more vacancies than unemployed people for more than two years, leading to a structural shortage in the labor market​ (UWV Particulieren)​. This means that employers have to compete harder to attract talent. Employees also have more options, so they keep looking around. 
2. Automation and technology: Although automation and technology are seen as solutions, it turns out 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 the work​ (SD Worx)​. This means that human employees are still crucial for many functions.
3. Workload and stress: Due to the lack of staff, the workload in sectors such as hospitality, education and healthcare is increasing. This leads to higher stress and burn-out complaints among employees, which further increases the challenge of retaining staff and attracting new staff​ (UWV Particulieren)​. 

Despite the fact that there were fewer jobs in the last quarter, the UWV believes that the labor market shortage is structural. 

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

It costs quite a bit to recruit and onboard a new employee. On average $4,700 according to The Society for Human Resource Management. On top of that, there is another $1,296 for training that new employee​ (Toggl Track)​​ (Homebase)​. In addition, you also have to take into account the valuable knowledge and expertise that is lost when an employee leaves. New employees are only fully trained after 3 to 8 months (Expert Beacon)​​ (Homebase)​.

In short, the combination of a structural shortage of available candidates and the high costs of recruitment and onboarding makes it essential for employers to develop effective strategies for retaining their employees.

How does a good pension scheme contribute to employee retention?

A good pension plan can play a crucial role in retaining employees 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 reduces stress.

An attractive pension scheme can also increase the loyalty and commitment of employees. Employees who feel secure about their financial future are often more motivated and dedicated to their work and the organization. They know that they are in a good position and can rely on the employer. In addition, a good pension scheme can be a distinguishing factor in a tight labor market that helps to retain talent (and, secretly, also to attract it). Employees often compare secondary employment conditions when making career moves, and a strong pension scheme can be a decisive factor.

Unfortunately, despite employees considering pensions to be very important, they don't really appreciate them that much. Why is this?

Pensions are self-evident for employees but undervalued

For many employees, a pension is a standard employment condition, but it is often undervalued. You might recognize yourself in this example: Lisa, a 35-year-old marketing manager, regularly receives information about her pension, but the complicated jargon and unclear overviews make it difficult for her to understand how her pension is built up and what the forecasts are. Without clear insight, she considers her pension scheme to be less important compared to other direct benefits such as bonuses, extra holidays and even a gym membership.

This lack of insight is due to the complexity and lack of transparency of traditional pension funds. Employees like Lisa do not know exactly how much they have accrued or where their money is invested, making it difficult to estimate the value of their pension plan.

How can you ensure that employees have more appreciation for their pension?

To ensure that employees like Lisa appreciate their pension scheme more, there are several strategies that companies can apply:

Provide transparency

Employers can offer user-friendly apps and platforms that give employees real-time insight into their pension accrual. If Lisa can see exactly how much she has accrued and how her money is being managed via an app, she will have more appreciation for her pension scheme.

Improve financial education

By offering employees educational resources, they can better understand how pension accrual works and what benefits it offers. This can be done, for example, through workshops, webinars or informative sessions. If Lisa better understands how her pension works, she will appreciate it more.

Flexibility and personalization

Empower employees to tailor their pension plan to their individual needs and goals. Lisa would like to have more control over her pension investments and the ability to adjust her plan to her life stage and financial goals. She is also wondering what happens to Lisa's pension if she leaves her current employer. 

By applying these strategies, employers can significantly improve the satisfaction and retention of their employees, which ultimately contributes to the success of the organization.

Reduce employee turnover by investing in modern, transparent pension solutions

Retaining employees is crucial in today's tight labor market, where finding suitable staff is becoming increasingly difficult. A good pension scheme can make a significant contribution to employee satisfaction and retention. Transparency, financial education and personalization are essential to increase employees' appreciation for their pension. When employees feel supported by a good pension plan, their satisfaction and loyalty increase, resulting in less turnover and lower recruitment costs. Investing in modern pension solutions is therefore a strategic move for organizations that want to retain and motivate their employees.