Pension contributions.

Pension contributions.

Paying in pension contributions is a way to take care of your employees and ensure that they have financial security after their working life. A pension scheme is therefore a key employment condition.

The pension contribution in two schemes

Read more about two schemes here: the average pay scheme and defined contribution scheme. Below we will briefly discuss both schemes and the advantages they offer employers and employees.

Pension contribution for average pay scheme

In an average pay scheme the focus is on the pension benefits. The pension benefits are a weighted average of the employee's salary over the period that pension contributions have been paid. Briefly put, the employee can expect a pension over the average pay earned during their career. The amount of the pension contribution is based on the pension benefits.

The advantages

By taking the average of salary increases the level pension contributions becomes manageable for employers - although the exact amount of the pension contribution is not fixed in advance. The advantage for employees is that they receive a defined benefit under an average pay scheme. Would you like to know more? Read more about our defined average pay scheme products

Defined contribution scheme

Under a defined contribution scheme, the amount of the pension depends on the pension contribution paid in over the years. Until the date when the employee retires, there are various options: pension contributions can be invested, a pension benefit can be purchased or the pension contributions can go towards a guaranteed capital insurance policy. The level of the pension contributions forms the basis.

The advantages  

A defined contribution scheme gives the employer maximum clarity about the level of the pension contributions. The advantage for employees is that they have more room to decide for themselves how to allocate the pension contributions. Would you like more information? Read more about our  defined contribution scheme products.