The impact of pension solutions on employee satisfaction and retention

Just as “clothes make the man,” employees make the company. It's a huge cliché, but it is absolutely true! As a company, you simply want to keep your best employees, and for that, it is important to ensure they remain satisfied. An important, yet often undervalued, aspect of employee satisfaction is the pension scheme, which 90% of the Dutch population consider a given. But did you know that only one-third of the Dutch population has a pension? And it is not just freelancers (zzp’ers) who do not have a pension! Many employees working 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, consequently, 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 Shortage in the Labour Market

In the current tight labour market, finding suitable staff is a major challenge. Various factors contribute to this shortage:

1. More vacancies than unemployed people: According to the UWV (Institute for Employee Benefit Schemes), there have been more vacancies than unemployed people for over two years, leading to a structural shortage in the labour market​ (UWV Particulieren)​. This means that employers must 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, the expectations surrounding them often turn out to be 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 employees are still crucial for many roles.
3. Work pressure and stress: Due to the lack of staff, work pressure is increasing in sectors such as hospitality, education, and healthcare. This leads to higher stress and burnout complaints among employees, further increasing the challenge of retaining existing staff and attracting new personnel​ (UWV Particulieren)​. 

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

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

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 is an additional $1,296 for training that new employee​ (Toggl Track)​​ (Homebase)​. Moreover, you must also take into account the valuable knowledge and expertise that is lost when an employee leaves. New employees are also 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 scheme can play a crucial role in retaining employees within an organisation. 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 employee loyalty and commitment. Employees who feel secure about their financial future are often more motivated and dedicated to their work and the organisation. They know they are in a good position and can rely on their employer. Furthermore, a good pension scheme can be a distinguishing factor in a tight labour market that helps retain talent (and yes, secretly, to attract it too). Employees often compare secondary employment benefits when making career moves, and a strong pension scheme can be a decisive factor.

Unfortunately, even though employees genuinely consider a pension important, their appreciation for it is not very high. Why is this?

Pension is self-evident for employees but undervalued

For many employees, a pension is a self-evident employment condition, but it is often undervalued. Perhaps you recognise 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 structured and what the prognoses are. Without clear insight, she considers her pension scheme less important compared to other direct benefits such as bonuses, extra holiday days, 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 being invested, making it difficult to estimate the value of their pension scheme.

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

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

Offer 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 gain 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 informational sessions. If Lisa better understands how her pension works, she will appreciate it more.

Flexibility and personalisation

Give employees the opportunity to adapt their pension plan to their individual needs and goals. Lisa would like more control over her pension investments and the ability to adjust her plan to her life stage and financial goals. There is also uncertainty about what happens to Lisa’s pension if she leaves her current employer, a question she asks herself. 

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

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

Retaining employees is crucial in the current tight labour market, where finding suitable personnel is becoming increasingly difficult. A good pension scheme can make a significant contribution to employee satisfaction and retention. Transparency, financial education, and personalisation are essential to ensure employees gain more appreciation for their pension. When employees feel supported by a good pension plan, their satisfaction and loyalty increase, resulting in lower turnover and reduced recruitment costs. Investing in modern pension solutions is therefore a strategic move for organisations that want to retain and motivate their employees.

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