Retirement savings: “Attractive mechanisms for talent retention”

A complementary product to health and retirement schemes, retirement savings represent a major challenge for companies. The insurance broker Verlingue has made this field a pivotal area of development, all the more so as the market is likely to benefit from the changes introduced by the PACTE Act and the pension reform underway. Explanations provided by Jean-Marc Esvant, Verlingue Deputy CEO.


Why is Verlingue actively positioning itself on the group retirement savings market?

Jean-Marc Esvant. Until very recently, in terms of social protection, employers were primarily concerned about employee healthcare and retirement coverage. Access to a health mutual that reimbursed the bulk of outlays on prescription glasses or dental prostheses was the main satisfaction criterion for employees. With the decrees, circulars and other regulations introduced since 2005, complementary health cover has to a certain extent become standardised. Today, our customers are concerned by two major developments: the PACTE Act and the pension reform. Both employees and employers are wondering about retirement savings mechanisms and agree that companies need to better understand the issue. We work daily with all types of business risks, which has naturally led us to strengthen our resources to assist our customers on this market, the third pillar of social protection.


Will the pension reform that is being prepared relaunch the issue of company retirement savings?

This is creating a huge buzz around retirement savings in general and the need to prepare for the drop in income after professional life in particular. I think that we are undergoing collective retirement therapy. Employees are realising that their replacement rate will decline over time. Ten years ago, when we talked to a young employee about retirement, he said that he hadn’t thought about it. Now, he is interested. Retirement has become an issue for social partners in companies.



“Companies without a retirement savings strategy or solution will not manage to attract and retain talented employees”


So why are so few companies offering supplementary retirement savings schemes?

We surveyed 500 corporate clients. Only 30% have a group retirement savings plan. Among companies offering such a plan, half have introduced a system exclusively for their management. If the pension reform goes into force, senior managers will be obliged to acquire their retirement rights over 3 PASS (annual social security ceiling) instead of 8 as is currently the case. This sharp reduction in entitlement-generating contributions will penalise senior managers and directors whose pensions will be reduced because they contribute less. The PACTE Act offers an opportunity to take up retirement challenges and constitutes a first lever for offsetting the inevitable decline in replacement rates. Nevertheless, there is a need to assure senior managers that the tax and social contribution requirements of the mechanisms agreed are sufficiently attractive. It is to be hoped that governments will continue to work along these lines by introducing real tax and social contribution incentives into supplementary retirement savings mechanisms. More generally, the replacement rate question will concern all staff, and companies will in any event have to take up this issue and offer attractive systems to retain and attract talented employees. As a result, group retirement savings will be a key component of pay packages and an essential part of companies’ social competitiveness. The reform of group retirement savings systems has enhanced their appeal with the lump sum withdrawal option, which was previously not possible. I have noticed that companies with a high management-to-staff ratio, like those in IT or new technologies, have already taken up the subject. Three years down the road, 50% of firms will probably be offering supplementary retirement savings plans.


How do you assist companies?

We examine the retirement savings mechanisms that the company has put in place. Do they cover all staff members? Are they fed by employees? Do they meet employee needs? Do they offer digitalised solutions? What are competitors offering? If the company does not yet have such mechanisms, we draw up recommendations. As part of its employee retention policy, it is in a company’s interest to implement an attractive supplementary retirement savings mechanism. Once the financial, social and tax audit is completed, our retirement savings experts work together with the company to define the solution that best meets needs. Then we identify the best operator to meet the goals set, to implement this solution.


Which operators do you work with?

Our strength is that we are completely independent. We select the operator best suited to the solution chosen. This may be an insurer, a bank insurer, a pension institution, etc. You can imagine the best possible solution, but without first-class end-to-end management, it doesn’t help. In any case, the solution must feature an optimum digital path. This is particularly true if you want your employees to make voluntary payments and have a clear picture of their retirement savings and retirement level simulations. The best operators are aware of this and have invested heavily in digital solutions.


How can you get employees on board?

Once employees understand that they can no longer count solely on mandatory retirement savings, they will quite naturally move to supplementary retirement savings. However, if the company fails to develop a social communication component, it may well miss the boat. It is important for employers to use all possible media – video, correspondence sent to employees’ homes, information meetings and Intranet – to promote their retirement savings vehicle(s). Our role also consists of assisting them to ensure that the message gets through. Making complex mechanisms simple is never an easy task.


Jean-Philippe Dubosc – L’Opinion