Case Study: DSM achieves added value in variable retirement benefits with Ortec Finance

Added value of variable retirement benefit

The Dutch multinational corporation DSM, with a defined contribution pension scheme for higher earners, sought to objectively evaluate the potential benefits of a new variable retirement benefit option for its participants. They engaged Ortec Finance to model and compare this new variable benefit against the existing option of purchasing a fixed benefit from the pension fund to see where the true added value for their employees lay.

Working with DSM, Ortec Finance conducted a quantitative analysis tailored to the specific financial position of the DSM pension fund. The solution provided clear, model-driven insight, confirming that a variable retirement benefit offered more value than a fixed insurer annuity and was particularly advantageous at the fund's lower coverage ratios, as participants avoid a costly surcharge. Ortec Finance's analysis showed this option could lead to slightly higher expected pensions but with greater year-to-year volatility, giving DSM the objective evidence needed to make an informed decision on implementation.

DSM

Stijn Spauwen

Head Pension & Actuarial Advice