Flexibility in supplementary pension schemes: a new opportunity for companies and their employees

A response to a long-standing concern

For many companies, setting up an RCP represented a financial commitment perceived as particularly inflexible, as they feared having to honour their commitments even during periods of economic downturn or deteriorating results. The IGSS guidance now provides a clear answer: it is possible to stipulate, from the outset, that a scheme’s contribution levels may vary according to certain objective economic indicators, such as turnover or profit.

The selected economic indicator is assessed on the basis of actual results. Consequently, any increase or decrease in contributions will only take effect in the following financial year, ensuring a transparent, objective and predictable mechanism for both the company and its employees.

This clarification gives employers greater confidence to make long-term pension commitments while preserving the flexibility to respond to changing business conditions.

When performance also benefits employees

The value of this approach extends beyond the ability to temporarily reduce contributions during more challenging periods.

It also offers the opposite possibility: allowing employees to benefit from the company’s strong performance.

A pension scheme may thus provide that, should certain financial targets be exceeded, the contributions paid on behalf of employees are increased. This transforms the pension scheme into a meaningful way of sharing long-term value creation with employees.

Beyond the financial impact, this sends a powerful message to employees: when the company succeeds, they share in that success.

This is a form of lasting recognition that usefully complements traditional variable remuneration schemes, whilst benefiting from the favourable framework applicable to supplementary pension schemes.

Flexibility that must be properly managed

However, this flexibility does not mean there are no rules.

The mechanisms for adjusting contributions must be defined when the scheme is set up, using objective, transparent criteria applicable to all beneficiaries concerned.

For existing schemes, introducing such flexibility remains more challenging, as it may be seen as a change to the original commitment made to employees.

The key lies in designing schemes today that are resilient enough to support every phase of the company's economic cycle.

Communication: a key factor for success

The success of a supplementary pension scheme does not depend solely on its legal or financial structure.

It also depends on employees’ understanding of the scheme.

Where a scheme provides for adjustments to contributions – whether an increase linked to strong performance or a temporary adjustment in less favourable circumstances – transparency becomes essential to maintaining employees’ trust and support. The IGSS note emphasises the importance for the company of documenting how these criteria are assessed and of communicating clearly with employees to ensure the scheme’s transparency.

Technology can also play an important role in supporting transparent communication.

Through our myBenefits mobile app, we can help companies in communicate these changes by sending targeted notifications to members. This enables employees to stay informed about developments affecting their pension scheme and reinforces transparency throughout the process.

A development that deserves the attention of HR directors and senior management

Although IGSS Information Note 2026/01 does not change the underlying legal framework, it significantly clarifies how supplementary pension schemes can be structured in practice.

It does, however, confirm that it is possible to design supplementary pension schemes that are more flexible, more resilient and better aligned with the economic realities of businesses.

Above all, it paves the way for a more modern approach to supplementary pensions: a scheme capable not only of adapting to economic cycles, but also of enabling employees to benefit from the company’s long-term success.

As organisations continue to balance long-term workforce engagement with changing economic realities, flexibility is becoming an increasingly important feature of employee benefits. The clarification provided by the IGSS offers employers an opportunity to rethink how supplementary pension schemes can support both business resilience and employee value over the long term. The most effective schemes will be those that successfully combine security, flexibility and a genuine commitment to sharing long-term success.