Traditional pension schemes are like a one-size-fits-all suit, while a tailor-made suit fits and looks much better. Imagine two employees: one has a stable, long career and wants to calmly build up their pension, 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 the exact same scheme. This means that the flexible employee cannot adjust enough to achieve their pension goals. In an individual pension model, this employee would have more control over the contributions and portfolio, making the chance that the desired goals are achieved much greater.

This lack of flexibility not only affects the employees but also places a heavy burden on employers. Collective pension schemes have financial risks attached to them and generate a lot of administrative work. Let's delve deeper 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 were 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 employment forms, demands 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 nature, where 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 extra contributions in the event of deficits in pension funds, make the system unattractive for companies. It places the responsibility for possible deficits with employers, something many companies try to avoid.

As Alexander Brouwer, founder of Vive, explains: "As an individual, you must gain control over your future. You must have the ability to steer towards your financial goals, just as pension administrators do for collective funds. We call this governance, or self-determination: the ability 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

The new Vive model seamlessly meets the needs of employees and employers. For employees, the Vive 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 can develop in the future and make timely adjustments if necessary. This ensures less uncertainty and more confidence in their financial future. 

In addition, Vive offers flexibility: employees can adjust their savings goals to their life stage, whether that is building up a pension, saving for a house, or setting aside money for a world trip. This personal approach ensures greater involvement and motivation to actively engage with their financial future.

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

Employers benefit from:

• Lower risks: No more unexpected extra contributions to cover deficits 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 lump sum with them when they move to another employer. 
• Greater employee engagement: Employees gain more insight and control over their pension, which ensures greater engagement and satisfaction. Think of conversations around the coffee machine about their contributions or the returns they have achieved so far.
• Attractive employer status: In a competitive labour market, you can distinguish yourself with a modern and flexible pension model that meets the needs of your employees.

By means of 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 optimise their pension. 

Do you want to avoid being stuck with an inflexible and costly pension model? Discover how Vive gives your employees more control and unburdens your company. Contact us today!