What’s In a Definition? That depends, in part, on what you’re trying to define.

When it comes to pensions, there are two important definitions:

1. Defined Benefit Plans are retirement accounts, into which an employer puts money. Benefits are calculated on a number of variables, including years of service, average salary in the last years of employment, and others.

2. Defined Contribution Plans are retirement accounts, into which employer and employee contribute money. Benefits are calculated on a number of variables, including the number of years contributed to the plan, the amount contributed, the amount the employer matched (if any), the way in which your investment fund (or funds) performed, and others.

Because of the administrative burdens, the expenses, and the long-term commitments required of Defined Benefit Plans, fewer employers and pension administrators are offering them. Defined Contribution Plans let employers contribute less, offload the administrative burdens, and be clear of the investments decisions required to manage their employees’ pension money.

In the Netherlands, new legislation, effective in September of 2016 (“Wet verbeterde premieregeling” Staatsblad van het Koninkrijk der Nederlanden, jaargang 2016, 248), gave employees the ability to choose between several payment schemes. Employees have the ability when they reach retirement age, to choose what they want to do with the money in their pension plans. They can choose several products with fixed or variable payouts, depending on their wishes and needs.

While giving employees the flexibility to choose is positive, there’s one major consideration inherent in the choice:

Because Defined Contribution Plans come without applicable benchmarks, employees may be at risk of underfunding their plans — and, so their retirements — especially if their contributions and the contributions of their employers aren’t carefully calculated over the term or expected term of employment. Employees may also be at risk if the earnings on their investment funds aren’t projected accurately, especially if their funds are invested in high-risk instruments. While most Defined Benefit Plan target replacing 60 to 75 percent of employees’ working incomes, Defined Contribution Plans have no such targets.

If you’re in the business of pension funding, you have as many variables to consider as the employers and employees you serve. Before deciding on the types of plans you’ll fund, make sure you know what’s in a definition and how you plan to administer the funds you provide.



We’re human beings. We like progress. But we don’t like change. By causing us to contend with the unfamiliar, it scares us. It takes us out of comfort zones, reliable habits, and the ways in which we’ve always done things. It leaves us feeling unprepared and ill equipped psychologically and operationally. But it doesn’t have to be that way.

What if we invested as much in imagination as we do in hesitation? What if, instead of fearing the introduction or imposition of change — of new ways of doing things — we envisioned and developed them? What if we took the initiative in devising and designing change, rather than waiting to react to it? What if we created the future, rather than waiting for it? Why wouldn’t we?

The Danish philosopher, Søren Kierkegaard, said: “Life can only be understood backwards; but it must be lived forwards.” He was right, of course. And to apply it, particularly in the insurance industry, all we need do is look back to see what’s been done — and look forward to imagine what can be done. Especially if we do that looking in collaboration with others of like minds and like needs, there’s no telling what we’ll be able to accomplish. But it’s likely to be entirely new and quite useful.

There are some who would discourage this notion, particularly as it pertains to the formalization and aggregation of imaginative power in things like innovation labs. They’re entitled to their points of view, and some of their points might be valid. But if we’re careful to sidestep the pitfalls, we can work together to foster progress, to promote the contribution of new ideas, and to accomplish much. It’s all about perspectives and faith in possibility.

If we create opportunities for the possible, we’re sure to actualize it. If we create those opportunities collaboratively, we can only increase our chances for actualization. And if we share in the actualization, we’ll also share in the rewards.

For the global insurance industry, an investment in imagination can lead us to look ahead and move ahead. Can you imagine what the insurance industry could accomplish — after investing so much effort in isolation over the past decades — if it opens up and starts to drive change collaboratively? Rather than reacting in the present, we can imagine for the future. That will enable us to be ready psychologically, as well as operationally.

The problems we face today, and the ones we’ll encounter tomorrow, will be tackled much more effectively and productively if we tackle them together.

Blog - Author - Sven Roehl

Sven Rohl

Sven Roehl | Head of Insurance Innovation msg and Co-Founder Cookhouse Lab

Sven Roehl is the Head of Insurance Innovation of msg Group and Executive Vice President of msg global solutions Canada Inc. Combining a mix of business strategy and technical innovation, Sven has worked with insurers globally for more than a decade to successfully develop and implement innovative strategies and products. As director of Cookhouse Lab Inc. Sven is also working with global insurers to accelerate insurance innovation through open collaboration.

For more information, visit Cookhouse Lab.