Obviously, the salary should reflect the value of your staff member's role and the skills required to accomplish the responsibilities. You can also sweeten the deal with a thirteenth month bonus, a company car, a flexible benefits plan... In short, you make sure that you cover the most common present needs.
But that doesn’t mean you can simply ignore future needs.
A sustainable salary package, more important than you think
No matter how you slice it, times have changed. Your staff members are planning for the future, regardless of their age. They want to set aside a sizeable nest egg so that they can maintain the same standard of living in retirement, because they know that relying on state pension benefits only is not a good plan. After all, the average state pension typically amounts to less than half of the last gross salary, a "replacement rate" that can hardly be called comfortable.
As an employer, you can help secure your staff members' future with an investment in the second pillar: a supplementary pension plan. Research even shows that it's a decisive factor in salary negotiations for 75% of employees (source: Assuralia French/Dutch). The good news is that you can top up the state pension with a supplementary pension to significantly raise the replacement rate.
Another important consideration for younger generations is the socially responsible side of investing for retirement. They want their funds invested in initiatives that are good for the environment and foster innovation and economic growth. Fortunately, sustainable investing is a practice we have embraced as a long-term investor. Over the years, it has become part of our DNA.
What drives an employer to set up a pension plan?
A recent survey by Assuralia (key figures: French - Dutch) shows that as many as 75% of staff members see a supplementary pension as a necessity, not a luxury. The survey also shows that over 70% of companies with a pension plan for white-collar workers, managerial staff and senior executives set aside contributions above 3% of the salary.
Most employers in Belgium that set up a pension plan in the past 10 years see it as an indispensable asset in attracting and retaining staff. And, of course, they also appreciate the tax benefits. With a group insurance plan, social security contributions are much lower than for cash compensation, and with the lower tax rate, your staff members will also end up with more cash in hand when they retire.
"I want to invest my staff members' variable pay in a group insurance plan, but isn't that risky?"
No, because the group insurance reserves and premiums are invested sustainably, taking ESG factors into account. This helps us to better assess the risks and achieve more stable long-term returns.
It's clearly a win-win situation, as both employers and their staff members come out ahead.
Benefits for the employer
Premiums are tax deductible. You lower your costs because you pay only 13.3% in employer contributions instead of 25%. And you offer your employees higher net take-home pay than with a straight salary increase.
Benefits for staff members
Your staff members will get an added sweetener on top of their state pension.
They also have the option to take out a cash advance against their supplementary pension reserves to purchase or renovate a home.
Their net reward amount is higher: they keep almost 75% of it.
Are pension plans common in your sector?
Want to know which type of pension plan is most popular among your peers? Or how much an employer in your sector contributes on average?
Then join us on 20 April 2023 for the unique event
Benchmark Study on Supplementary Pensions
at our AG Campus in Brussels.
We'll start off with lunch followed by a fascinating overview of the pensions landscape in Belgium by experts Mabelien Coppens (Legal Advisor at the FSMA) and Pierre Devolder (Professor of Finance at UCLouvain). And last but not least, our speakers will reveal the findings of our benchmark study on the second pillar.
Not registered yet? Don't delay, sign up right away: