Leadership in Action — When Decisions Shape Outcomes

The Impact of Member-Funded Fees and AVCs in Retirement Savings Plans

As 2026 begins, one truth endures: in every retirement plan, two forces quietly shape outcomes – costs and choices. Both compound. Both are within human control.

Across global retirement systems, expenses once absorbed by employers are increasingly borne by members. What appears small in percentage terms becomes profound over time.

A difference of just 0.35% per year can reduce lifetime retirement savings by more than 10%.

The Compounding Reality

For a 35-year-old earning €100,000 with a 20% bonus, contributing:

• 10% employer.
• 5% member.
• 3% AVC.

Total annual contribution: €18,000.

Invested to age 67:

• At 0.30% total fees → projected fund = €1.19 million.
• At 0.65% total fees → projected fund = €1.07 million.

That modest fee difference erodes €120,000 – purely through cost drag.

Integrity compounds when stewardship is proactive, disciplined, and considered.

Why Contributions on Total Earnings Matter

Limiting contributions to base salary alone can unintentionally exclude part of a person’s real income – particularly bonuses that recognise performance and commitment.

Contributions on total earnings – rather than base salary – ensure that retirement savings reflect the full value of each individual’s contribution to the organisation.

• Builds fairer, more complete protection.
• Helps sustain post-retirement living standards.
• Signals that leadership recognises the whole person – not just the portion of their pay coded as “base.”

Financial design becomes cultural expression.

When structure reflects belief, benefits become visible respect.

Why AVCs Matter

AVCs are not simply financial tools. They are acts of responsibility.

They allow members to:

• Harness compounding early – turning time into growth.
• Close the gap between mandatory savings and their desired standard of living in retirement.
• Offset the impact of fees and inflation on long-term value.
• Demonstrate shared responsibility alongside employer support – strengthening a culture of belonging and care.
• Maintain flexibility, with contributions that can adapt to changing life stages.

When communicated well, AVCs become more than a financial option – they become a values-based choice that reflects both employee trust and intent.

Leadership Reflection

“It’s not necessary to do extraordinary things to get extraordinary results.”
– Warren Buffett

Small, consistent, values-based decisions – on fees, contributions, and communication – create extraordinary outcomes.

Trust and integrity also compound.

Imaginari Insight

Imaginari supports values-driven employers in reducing member-funded fees, aligning contribution design with leadership intent and fiduciary responsibility, and strengthening AVC engagement through clarity and trust.

Stewardship is measured by how well people are included, informed, and protected.