Just as “clothes make the man,” employees make the company. Extremely cliché, but absolutely true! As a company, you simply want to keep your best employees, and it is important that you ensure they remain satisfied. An important, yet often undervalued, aspect of employee satisfaction is the pension scheme, as 90% of the Dutch population see this as a given. But did you know that only a third of the Dutch population have a pension? And it's not just freelancers who don't have a pension! Many employees working for 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)?
In the current tight labour market, finding suitable personnel is a major challenge. There are several factors contributing to this shortage:
Despite there being fewer jobs in the last quarter, the shortage 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. Another $1,296 is added for training that new employee (Toggl Track) (Homebase). Moreover, you also have to consider 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.
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. This increases employee satisfaction and peace of mind. And lowers 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 that they are well taken care of and can rely on the employer. In addition, a good pension scheme can be a distinguishing factor in a tight labour market that helps to retain talent (and yes, secretly to attract it too). Employees often compare secondary employment conditions when making career moves, and a strong pension scheme can be a deciding factor.
Unfortunately, despite employees finding a pension truly important, the appreciation for it is not very high. Why is this?
For many employees, a pension is a standard 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 accrued and what the forecasts are. Without clear insight, she considers her pension scheme less important compared to other immediate 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 being invested, making it difficult to assess the value of their pension scheme.
To ensure that employees like Lisa gain more appreciation for their pension scheme, there are several strategies that companies can apply:
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.
By offering employees educational resources, they can better understand how pension accrual works and what benefits it offers. This can be, for example, through workshops, webinars, or informational sessions. If Lisa better understands how her pension works, she will appreciate it more.
Give employees the opportunity to adjust 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. The uncertainty about what happens to Lisa's pension if she leaves her current employer is also 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.
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 for employees to gain more 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 organisations that want to retain and motivate their employees.