The new pension: individual and comprehensible

3 December 2020


The new Pension Agreement will bring with it major changes. Those saving for retirement will receive more control over their “piggy bank for later”. That’s great but also a bit daunting, because consumers will now have to think more about their nest egg. ‘The key is to make pensions simple, clear and fun. Luckily, we can do a lot to make that happen.’

The new Pension Agreement between Dutch Minister Koolmees, the trade unions and the insurance companies comes just in time. The current system is falling apart: yields are plummeting, coverage ratios are at a historic low and adjustment for inflation appears impossible. Even nominal distribution is decreasing for an increasing number of pensioners. Even more painful is the fact that most people have either no or only a miniscule amount of influence on the amount of their pension; it simply “overcomes” them. It’s no wonder, then, that consumer confidence in the pension sector has rarely scored higher than a paltry six in recent years.

More room for customisation
In the new scheme – the result of no less than 10 years of negotiations – there is a lot more room for customisation. The state pension age is linked to the average life expectancy, the contribution is changing from “typical” to “individual” and you will be able to freely withdraw 10% of your funds immediately after retirement. The surviving dependants’ pensions will be simplified, and employers will have the option of allowing their employees to take fiscally attractive early retirement.

A good thing
Insiders consider the increased influence of pension savers on their nest egg to be a good thing. One of these insiders is Jan Hein Rhebergen, director of online pension administrator BeFrank. His company has been offering pension schemes to Dutch employers for almost 10 years. BeFrank manages the individual pension funds of around 270,000 employees working for about 1,000 affiliated employers – a total managed capital of some € 5 billion – and is extremely ambitious. Rhebergen: ‘Our mission is to actively involve people in their pensions. This is more important now than ever before. I don’t understand why so many Dutch people are so indifferent when it comes to dealing with their future income. So many people don’t start thinking about it until they’re almost ready to retire. And then it’s too late to do anything. But if you consciously start planning for the future at a young age, monitor the growth of your pension fund, and adjust it, if necessary, then you will truly be able to not only understand but also influence it. This is important because it’s your money; your salary for later.’

Savers are “financially aware”
Rhebergen advises every pension saver to actively pay attention to their old-age provision when they are young. ‘We believe that consumers are entitled to comprehensible and current pension information and 24/7 insight into their own pension fund, with a clear explanation. It is more important now than ever before for employers to clearly inform their employees. They should understand how their pension works and how they themselves can influence the amount of their pension; for example, by changing their risk profile or contribution amount or making additional contributions. Making such timely adjustments will give their pension more time to grow, if they need it to.

Continuous, up-to-date information
Rhebergen is pleading for more transparency, more clarity. He likes to set a good example of this with his company. ‘We offer people continuous up-to-date information about their numbers, in easy-to-understand language. This means you can see and understand how your pension is currently doing every day of the week. And it makes pensions clear, transparent and even fun, instead of complicated or boring! For example, with clear welcome videos or video tutorials. Or with activation promotions. Or even with a BeFit programme that helps people become both physically and financially fit. This way you’ll have more control over your “income for later”.’

70% of participants active online
A critical professional jury awarded BeFrank the honorary title of PensioenWegwijzer (Pension Pioneer) in 2019 for its activation method. ‘That was a nice little extra,’ says Rhebergen, ‘but what really makes me happy is the fact that about 70% of our participants check out their online overview – a unique score in this market. And that an increasing number of these participants are becoming pro-active in optimising their pension.’

This article appeared in NRC Handelsblad on 28 November 2020.

Pensions aren’t about a quick profit but rather about long-term investment. In this spirit, BeFrank aims to continuously offer more and more sustainable investment options. To achieve this, the Nationale Nederlanden subsidiary is working together with Triodos, among others. Rhebergen: ‘If you invest in sustainable projects – such as clean energy, the circular economy or health – then you can truly make an impact with your pension. Your pension fund will make the world just a little bit better and cleaner.’ BeFrank’s online environment shows employees how big the impact of this choice is, translated into the number of saved showers, plastic bags and kilometres driven. BeFrank recently decided to take it a step further. ‘Employers can now also opt for a CO2-neutral pension scheme. In addition to socially responsible investing (SRI), with this scheme you can compensate for the remaining emissions resulting from your investments with the planting of trees in vulnerable regions of the world.’ The fact that they also operate as a CO2-neutral organisation is self-evident to Rhebergen.

BeFrank also makes pensions clear and simple for employers. The company offers pension schemes, including a complete employer portal with all possible forms of support, the option of automatically conveying changes and clear information at the right moment. Rhebergen: ‘We take a lot of the day-to-day work out of employers’ hands. For example, we inform employees about current issues and provide updates in a very accessible manner and in clear language to that employers don’t have to deal with so many questions. There is a new online dashboard that tells employers how much their employees are actively using the online platform and its various tools, such as the profile selector. This gives employers a good idea of how pension-aware their employees are. Based on this they can set targets, and together we can set up a campaign, for example in order to boost use of the online environment from 70% to 80%, and perform anonymous benchmarking with other companies. This is how we’re working together towards better pension awareness.’