Traditional pension schemes are like a one-size-fits-all suit, while a tailored suit fits and looks much better. Imagine two employees: one has a stable, long career and wants to build up their pension calmly, while the other works more flexibly, changes jobs regularly and wants to achieve their savings goals faster. In a collective pension fund, both employees receive exactly the same scheme. This means that the flexible employee cannot adjust enough to achieve his or her pension goals. In an individual pension model, this employee would have more control over the contributions and portfolio, making it much more likely that the desired goals will be achieved.

This lack of flexibility not only affects employees, but also places a heavy burden on employers. Collective pension schemes involve financial risks and a lot of administrative work. Let's take a deeper dive into the specific costs and risks that traditional pension funds entail for employers.

The costs and risks of traditional pension funds for employers

Traditional pension schemes are designed for a time when employees spent their entire career with one employer. But this is no longer the case. The growing flexibility in careers, where employees change jobs more often or work in flexible forms of employment, requires a pension solution that meets individual needs.

Employees do not have the option to adjust their contributions or portfolio to their personal situation. This collective character, in which everyone falls under one fixed plan, does not take into account the unique needs of employees.

In addition, employers are less willing to bear the risks associated with traditional pension schemes. The administrative complexity and financial burdens, such as making additional contributions in the event of pension fund deficits, make the system unattractive to companies. It places the responsibility for potential deficits on employers, something that many companies are trying to avoid.

As Alexander Brouwer, founder of Vive, explains: "As an individual, you have to get a grip on your future. You must have the possibility to control your financial goals, just as pension administrators do for collective funds. We call this governance, or self-determination: the possibility to effectively make decisions about your own financial situation.”

And that is exactly why Vive was founded. To offer employers and employees an alternative that better suits society as it is now and the individual needs of employees.

Advantages of a new pension model

Vive's new model seamlessly meets the needs of both employees and employers. For employees, Vive's model offers important advantages. Firstly, they gain more insight and control over their pension accrual. By having access to tools such as scenario analyses, they can see how their pension may develop in the future and adjust it in time if necessary. This creates less uncertainty and more confidence in their financial future. 

In addition, Vive offers flexibility: employees can adjust their savings goals to their stage of life, whether it's building a pension, saving for a house, or setting aside money for a trip around the world. This personal approach ensures greater involvement and motivation to actively work on their financial future.

And the great thing is that this approach also eliminates significant costs and risks for employers.

Employers benefit from:

• Lower risks: No more unexpected additional contributions to compensate for shortages in a collective pension fund.
• Less complexity: Instead of being stuck with complicated and outdated pension rules, you offer your employees a flexible solution that adapts to their personal goals. Moreover, they simply take their pot of gold with them when they go to another employer. 
• Greater employee engagement: Employees gain more insight into and control over their pension, which leads to greater engagement and satisfaction. Think of conversations around the coffee machine about their contributions or the returns they have achieved so far.
• Attractive employer branding: In a competitive labor market, you can distinguish yourself with a modern and flexible pension model that meets the needs of your employees.

Through advanced tools, such as scenario analyses with 2000 possible outcomes, employees can gain insight into their future pension accrual. As an employer, you no longer have to contribute to an inflexible system, but you offer your employees a tool with which they can independently manage and optimize their pension. 

Want to avoid being stuck with an inflexible and expensive pension model? Discover how Vive gives your employees more control and relieves your company. Contact us today!