A good pension scheme shows good employership, so it is important to set it up with great care.
Many important choices have to be made during this process. How much freedom of choice do I want to give my employees? How much risk can they take? How much budget is there? When the new pension system starts, do I want to keep the age-related premium for employees who were previously employed? Or will there be a generic age-independent premium, with compensation for employees affected by the new system?
Of course it is wise to keep a close eye on the costs. But you shouldn’t cut corners on some parts, because otherwise you lose quality, says Serge Mans, DC specialist at Aegon Cappital. He lists five things you should consider because they pay off in the long run.
1. A good advisor
“According to the Financial Supervision Act you are obliged to go through an advisory process when you set up or change a pension scheme. That’s not for nothing. It’s quite a complicated matter.
It can be tempting to choose the advisor with the lowest rate. But cutting back on this post can cost you dearly. If a mistake sneaks into the pension scheme due to bad advice, it can have major consequences. You have to redo some of your work and have to deal with angry employees. Therefore choose quality. A good advisor is of great added value.
By the way, don’t wait too long with your search for a good advisor, if you really want to have something to choose from. As the new pension system gets closer, pension advisors are getting busier and busier.”
2. A good retirement investor
“Pensions are built up through investments. Therefore, make sure that you choose a pension provider that is able to achieve high returns. Of course the costs count, but the investment result is just as important.
If you only go for the cheapest provider, but it subsequently achieves a lower return, you are still worse off. In that case, it is better to pay a little more.
So do not only look at the results achieved in the past, but also at the expected return in the future.”
“Of course, the content of your pension scheme is central. But don’t forget to inform your employees about the pension scheme and to involve them in the decisions they have to make. There are now more choices to be made than in the past. It is then crucial that your employees understand what the pension scheme entails and what choices they have.It makes your employees financially fitter. So communicate about it often. You can do that yourself, leave it to a pension adviser or administrator or, better yet, opt for a combination of these three.”
4. Good administration
“It seems like an open door: good pension administration. But if that is not in order and, for example, mutations are left behind for a longer period of time, this puts a huge burden on your payroll administration. That costs time and money. So it’s better to pay a little more for quality than cut corners.
If you have a party in mind, ask for references from customers. And really approach them, it will give you more confidence. If the provider does not have it available, you can draw your conclusions.”
“A pension scheme can look nice, but also take a good look at the conditions. For example, what happens to the employee’s capital if he dies before the retirement date? Does the money go to the insurer or to the next of kin? And what conditions apply if you want to get rid of the contracting party because you are dissatisfied with it? Can you simply move the entire pension pot with you, or is that not actually possible with that party, or do you have to pay for it?
The conditions are not always set in stone. Sometimes you can negotiate about it; especially if you are a large company. Try to use that space.”
About Aegon Cappital
Aegon Cappital is Aegon’s premium pension institution (PPI). They have been active in the pension market since 2012. Aegon Cappital helps you and your employees think ahead when it comes to retirement. They now do this for more than 5,600 satisfied employers and more than 270,000 employees. Also a pension provider who thinks ahead with you? Look at www.aegoncappital.nl..