An increasing number of employers is considering strengthening their Employee Benefits (EB) offer to become or stay a preferred employer for its workforce. It is not always about a competitive pay check, in fact some employers create their own ecosystem where experience of the employer “why” is close to just as important. And they are right. EB can be an exceptionally powerful tool to distinguish employers from one another.
Some elements of the financial employee package have always been subject of interaction with financial advisers. Pensions are a good example.
Pensions in the Netherlands
Dutch pensions exist in many shapes and forms, are highly tax driven and the extent to which employees have some influence on their financial pension future require a thorough analysis at the scheme’s outset but regular update checks are necessary as well. Pension advice should result in a solution that fits the employer in its competitive landscape, on its evolutionary path, aligned with the expected and desired staff composition and of course also its financial capabilities. From the repair work we do it is clear not all corporate pension schemes meet their intended targets.
A pension is delayed (retirement) income; when structured correctly its taxation is delayed too. Income tax for pensioners is lower than before retirement. For employees it offers a fair expectancy (there are no iron-clad guarantees) of lifelong income after retirement. And it builds up soon, also for expats with a horizon of a few years here.
Everybody living and/or working in The Netherlands above 15 builds up State Pension at a rate of (at least, 2020 rate) gross €206 per year. On average, someone participating in a pension scheme and earning €40,000 gross per annum adds €460 per year to that number. If that person is a Dutch tax resident for 5 years with this income, after the retirement age there will be a check of €3,400 gross, wherever you live, as long as you live, the State Pension most likely still triple-A rated and the rest not much worse. Although for most their pension age is far away now, participating in a scheme adds to future financial independency.
Realizing a corporate pension scheme takes some effort but you can leave most of the work to your adviser. Once you have set the targets, you need a process including duly approval and especially communication and seamless execution between your HR team and the pension fund/insurer.
Financial planning for employees
Dutch research shows that employees feeling secure about their financial future perform better, are healthier and happier. Employers increasingly facilitate financial planning for employees.
In several collective labour agreements employees have the right to ask the employer to subsidize (anywhere between 50-100%) making an individual financial plan.
Some employers have a “generation pact”; the aged workforce reduces its employment in favour of younger new employees. The senior staff needs to be comfortable with the impact of the modest pay cut. A financial plan makes it visible what it means for income now and pension income.
When companies reorganize departments sometimes redundancies are unavoidable. Especially where the employer offers a severance payment which can be combined with unemployment facilities, a financial plan showing the financial capacity of those impacted by the reorganization helps reduce feelings of insecurity and anxiety.
Benefits of Your Financials
Our practice exists for more than a decade. The team includes two professionals with sufficient life and professional experience. We are qualified for what we do and meet both professional and oversight standards. Our customers regularly leave positive reviews at www.advieskeuze.nl for planning, mortgage and estate planning advice.
If needed or preferred we can separate the employer process from the employee processes.
We interact with several excellent professionals to create tailored solutions and are comfortable involving your preferred providers (e.g. accountant, hr partner, communication team, tax consultant) in the process.