Traditional pension schemes are like a one-size-fits-all suit, while a bespoke suit fits and looks much better. Imagine two employees: one has a stable, long career and wants to build up his pension calmly, while the other works more flexibly, changes jobs regularly, and wants to achieve his savings goals faster. In a collective pension fund, both employees receive exactly the same scheme. This means 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 the chance much greater that the desired goals will indeed 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 generate a lot of administrative work. Let's delve deeper into the specific costs and risks that traditional pension funds entail for employers.
Traditional pension schemes were designed for a time when employees spent their entire careers with one employer. But this has long been 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 additional contributions to cover shortfalls in pension funds, make the system unattractive for companies. It places the responsibility for potential shortfalls 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 fund 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.
Vive's new model seamlessly aligns with the needs of both employees and employers. For employees, the Vive model offers significant advantages. Firstly, they gain more insight and control over their pension accrual. By accessing tools like scenario analyses, they can see how their pension might develop in the future and adjust in a timely manner if necessary. This leads to less uncertainty and more confidence in their financial future.
Additionally, Vive offers flexibility: employees can adjust their savings goals to their phase of life, whether that is building up a pension, saving for a house, or setting money aside for a round-the-world trip. This personal approach ensures greater engagement and motivation to actively manage their financial future.
And the great thing is that this approach also eliminates significant costs and risks for employers.
Employers benefit from:
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 instead, 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 relieves your company. Contact us today!