Pensions are not traditionally at the top of someone’s priority list when choosing a job, and people tend to think of them as something organized in the background, put in a drawer and that’s that. But things are changing. Despite our fast-paced lives, people are realizing more and more that bringing certainty to their lives through long term planning is important. Pensions are quickly becoming a major factor in searching for a job, and today they are much more than just a fund; they’re catalysts for substantial tax benefits for both employer and employee, for companies they contribute to being a good employer and there are significant advantages to starting early.
Brand New Day is a team of pension passionate entrepreneurs who are disrupting the pension industry in the Netherlands. Since starting in 2010, they’ve grown to hold over 260,000 accounts with another 4,500 companies entrusting them to manage their pensions, and they’re determined to build the modern pension experience; low cost, digital, transparent and flexible. Brand New Day has listened to the changing market and built a business for it. Ahead of our meetup for B. members to come together and talk with Brand New Day, we spoke to Account Manager Pim Adams from Brand New Day and Finance Manager Chris Pais from True Legends, an IT recruitment firm who have recently selected Brand New Day to be their pension guru.
Why did you decide to have a pension plan in the first place?
When I started at True Legends last year the CEO said they didn’t have a pension plan but they wanted one. The motivation to instigate one at True Legends was two-sided; I’m doing it for the company because it has real benefits as an employer, but I’m also an employee so it’s important to have one for my own sake. I actually already knew of Brand New Day through a previous employer and had had a really positive experience with them then, so it was natural to see if they would be suitable for True Legends as well.
And why did you specifically choose Brand New Day?
One reason is that they’re not a pension adviser and we didn’t need one to start our pension plan with them. That was even more relevant for us because I already had some experience with pensions. They allow you to make your own choices based on what’s best for you. They were really easy to communicate with from the start, there’s no big gap between them and us and I like that. For me, I had to think from the position of the employer and employee, and Brand New Day gave me the tool to do so.
Another big attraction to Brand New Day was its price. It’s a really well-priced service, which is unusual for pension providers. We chose to not have an external advisor and set up the pension plan ourselves, which makes it, even more, cost-effective. I had a lot of nice conversations with Brand New Day people as well and in the end, I had my own contact person which was Pim and that made everything so much easier. So it was a combination of things; price, communication, simplicity and a nice experience all in one.
What are the benefits of having a pension plan for an employer?
It’s always good to have happy employees and importantly not just happy in the short term but also for the long term, and that’s where I think pensions come into play. You want to have a good relationship with the people who work for you, and you should give back to those adding value to your business, both in the present and the future. It’s fundamentally a good way to be an employer. Having a pension plan is also a plus when it comes to attracting talent. It’s not the first thing that will attract someone to a job, salary alongside the actual job role is most likely to be the primary factor, but pensions contribute to an attractive environment. Pensions are a kind of hygienic working factor; they should always be in place.
Do you think pensions are becoming more important?
Pensions aren’t as important as they should be. Especially for young people, it’s hard to plan for forty years down the line. I think the mentality that says I’d rather have more money now is really common, but I think people should think more about their future because it will inevitably happen. People need to be aware of the options available and how they can use them to benefit themselves.
What advice would you give to startups and scaleups who don’t have a pension plan?
We’re still a startup ourselves, and if you employ three or five people I understand it’s not your first concern, but as I said before pension plans, especially with modern providers like Brand New Day, attract people to you in a competitive labor market. It’s an extra benefit for them and it creates happy employees for the long term, which for a startup is really important. Pensions aren’t just for bigger companies and it’s important for startups as well, no matter how small.
Could you say a little about pensions here in the Netherlands?
Pensions are considered a low-interest product; people feel like they need to have one at some point, but it’s easy to procrastinate and delay getting one, especially with young people. Yet in the Netherlands, it’s actually one of the most important secondary labor conditions, but if you ask an employee what their pension looks like and how it works, they have no idea. 70% of employees in the Netherlands have collective labor agreements and pensions are automatically regulated in those areas. So 70% don’t have a choice, and that’s partly why it’s expected for employers outside of these collective agreements to have one, which includes most startups. In short, if you’re in the Netherlands most employees believe the employer should have some kind of pension plan in place.
Why should people care about their pension today?
I think pensions should be something everyone thinks of, but even more so for younger people. The earlier you start the less you have to contribute and the more benefits you gain later on. For example, if you’re twenty-five and start a pension plan, you’re going to accumulate a pension that is double that of someone who starts a comparable pension at thirty-five. That’s a massive reward for acting sooner rather than later.
Also the tax benefits for employees who have a pension plan are really advantageous; all contributions to a pension in the Netherlands are taken out of a person’s core salary and then what the employer pays is also gross so you don’t pay tax on it, and when you take it out at the other end you end up in a lower tax bracket. It’s the same for the employer in terms of tax benefits because pensions are cheaper than salaries. When you pay an employee a salary you also pay social contributions which can be up to 18% on top. But if you pay into an employee’s pension, you don’t pay any tax.
Why is Brand New Day different than other pension providers?
I believe the two main differences are cost and flexibility. Most traditional suppliers are expensive and inflexible, and sometimes employees even have an obligatory contribution. But with us, each employee has a personal pension pot and the employee can decide how much they want to contribute from their gross salary. Pensions plans with us allow you to tailor your pension in a way that works for you, and that doesn’t have to be costly.
Pensions are notorious for being complicated and outdated, how does Brand New Day make things simple?
We communicate with normal language because we want our service to be accessible to everyone. You can access your pension online, you can see everything no matter where you are in the world and there are no difficult letters. It’s transparent and reachable, and that’s something we do really well. Almost all of our competitors force you to have an adviser who acts as the middle man, but we don’t do that. If you want an adviser that can be very wise, but you don’t have to have one to deal with us. If you’re a startup and have one employee, it’s the same as everyone else.
Looking forward, what should be the big takeaway about pensions?
I think it’s about being aware of your financial situation. You should take care of your own future and make your own decisions including how much pension is right for you. We want to promote taking responsibility and I think we facilitate that through the service we provide. And it’s the same for businesses; pensions can really make a positive impact on your business and contributing to certainty in employees’ futures is a good thing for everyone.
We’re excited to be hosting a free pizza and beer meetup to allow members to come together and talk with Brand New Day about how a pension plan could benefit them. It’s a great opportunity to eat, drink, network and talk with others in the B. community, all whilst getting some useful information. The meetup will take place on December 19 and everyone is welcome!