3 Practical pension management problems and solutions for HR managers

Pension management is an important topic for HR managers. Not only because it offers financial security to employees, but also for attracting and retaining talent. Many HR managers encounter a number of practical problems relating to pension management. In this blog, we discuss the main challenges and offer practical solutions for a future-proof pension policy.

1. Pension as an attractive and flexible employment benefit

In a tight labour market, pension is a strategic tool for attracting and retaining talent. Employees have varying expectations, depending on their age, financial situation and personal goals. Employers must therefore ensure that they offer a pension scheme that is both attractive and flexible.

Many traditional pension schemes offer little scope for customisation, while employees increasingly need more control and freedom of choice. Creating a future-proof and flexible pension policy is therefore an important challenge for HR managers.

How do you give your employees the flexibility they expect? And how do you also ensure that they truly appreciate the pension, as it is often seen by younger employees as a “distant reality.” These are questions that HR managers face.

2. Cost control for employers

Managing the costs of pension schemes is a challenging issue for employers. Collective schemes can put a heavy strain on an organisation's financial resources, while flexible third-pillar solutions offer more customisation. Determining a fair and achievable employer contribution, without affecting business results, also remains a delicate balance. HR managers must find a balance between offering attractive pension provisions and safeguarding the organisation's financial capacity. Whether it concerns collective pension schemes or individual third-pillar options, insight into costs and smart choices are essential.

A frequently asked question is therefore: “how do I calculate the correct pension contribution?”  This depends on the chosen pension scheme and the financial capacity of your organisation:

Practical example: For an employee with a pensionable salary of €40,000 and a premium percentage of 20%, where the employer contributes 60% of the premium, the calculation is:Employer contribution = €40,000 × 0.20 × 0.60 = €4,800 per year.

By using a clear calculation, you can make contributions predictable and manageable for your organisation.

Another question we often hear is, “can I adjust the contribution later based on what happens within my organisation?” And to that, we emphatically say, yes. At least, within a third-pillar pension, the employer's contribution is optional. So, if things are going a little worse, or even better, you can simply adjust the contribution. However, you must then explain this adjustment to your employees. 

Unfortunately, such adjustments are not possible within a collective scheme, or at least, they are difficult. An employer who wants to implement changes in a pension agreement must have the employees' approval. An employer is only permitted to unilaterally adjust the pension scheme in exceptional situations, where there is an important interest in the proposed change. So this is less flexible, and if you, as a startup or scale-up, do not have the financial capacity for this, it becomes difficult, because pensions must continue to be paid.

3. Administration

Managing pension schemes often involves a significant administrative burden. HR managers must not only calculate premiums and reconcile them with pension funds or insurers, but also ensure clear communication to employees. In collective pension schemes (second pillar), employers are often responsible for paying the premiums and managing the administration. With third-pillar solutions, this burden lies more with the employee, but HR remains involved in informing and guiding employees. This requires a good balance between efficiency and clarity.

When managing pension schemes, it is not only important that employers properly understand their contributions, but also that employees know how they can actively contribute to their pension themselves. This often raises the question: how does an employee calculate their own contribution?

Employees can calculate their own contribution by following these steps:

Practical example: An employee with a pensionable salary of €40,000, who then contributes 20% of the salary themselves, ultimately puts €4,000 into the pension pot. With an employer match of 50%, the employer contributes an additional €2,000 (if no limit is indicated). Own contribution = €40,000 × 0.20 = €4,000 per year, and receives an additional €2,000 from the employer.

By making these calculations transparent, employees are encouraged to actively contribute to their pension accrual. Of course, remember that your contribution currently comes from your net salary - and you will get the taxes back later, in the summer. 

As an HR manager, you are naturally already aware of these problems. But how can you solve them now? Read on quickly to find out.

How do you solve these problems as an HR manager?

Tackling the challenges surrounding pension management requires a strategic approach. Here are targeted solutions that align with the three main problems: attractive employment benefits, cost control, and administrative burdens.

1. Make pension attractive and flexible

Employees expect more control and freedom of choice in their pension schemes. By making pensions attractive, you not only strengthen the trust of your employees, but you also improve your employer brand.

2. Manage costs effectively

Cost control is all about transparency and smart choices, so that you, as an employer, find a balance between attractive pension options and financial sustainability.

3. Alleviate administrative burdens

Efficiency in administration not only saves time but also prevents errors and misunderstandings that could damage trust in the pension policy.

Why this works

With a strategic approach, you, as an HR manager, can turn practical problems into opportunities. By offering customisation, smartly managing costs, and efficiently structuring administration, you strengthen employee trust and engagement. At the same time, you lay the foundation for a future-proof and effective pension policy.

From complex problems to effective solutions for HR

Pension management is a complex component of HR management. It not only offers financial security for employees but also plays a key role in attracting and retaining talent. As discussed in this blog, HR managers face challenges in the areas of attractive employment benefits, cost control, and administrative efficiency.

By focusing on customisation, smart cost strategies, and streamlined processes, these challenges can be turned into opportunities. Implementing flexible pension options, deploying digital tools, and involving external experts not only helps to relieve the workload but also strengthens employee trust and satisfaction.

A future-proof pension policy shows that organisations not only have an eye for today's needs but also for the financial future of their employees. HR managers play a central role in this, and with the right approach, they can contribute to a strong employer brand and sustainable business operations.

Invest in a strategic pension policy that suits the needs of your employees and organisation. The right choices today lay the foundation for a stable and successful future.