17 Mar 2011
Adding to the complexity of employing the right talent is growing employee demand for flexible and attractive benefits packages that meet their individual needs throughout the life of their career. But how can you meet the needs of tens of thousands of employees across a multitude of jurisdictions and regulatory environments in a way that is cost efficient and fair? The answer, according to Margrit Schmid, Chief Market Officer and Head Swiss Life Network, is to rely on a solutions provider who understands employee benefits needs in every country where they work.
“Imagine you are one of today’s up-and-coming executives who spends more time in the air than on the ground and is regularly moved, with your family, to postings in far-flung regions of the world,” she says. “Planning security in terms of accumulating sufficient retirement is of utmost importance, and ancillary needs will change with each new posting.”
Employees taking charge
Recent reports show growing evidence that members of the Baby Boomer generation are delaying retirement out of worries that their pension funds are inadequate to meet their future health and lifestyle needs. At the same time, public and government distaste for huge bonus payouts is forcing corporations to review their overall incentive and reward strategies. “The long-term character of employee benefit solutions represents a very valuable counter position to the short-term bonus philosophy,” Schmid suggests, “and it is often less visible.”
Yet high profile pension fund collapses over the past ten years have left employees nervous of trusting their future financial security to faceless managers without accountability. No wonder key staff are putting company benefits packages under the microscope. “Being able as an employer to provide sufficient transparency and comfort about the financial strength of your pension solution has become a key success factor in the competitive labour market,” Schmid adds.
Employees are also looking to take a more active role in determining the best benefits package to suit their needs. With the internet it is relatively easy to be informed about options for asset management, and social networking sites give people access to the power of peer review. The result is knowledgeable employees with a clear idea of what they are looking for.
“The flexible benefit solution is becoming more and more popular,” says Schmid. “Employees can, within a certain framework, choose their options and adjust them according to their needs and personal situation.” Benefits solutions, therefore, should facilitate the specific needs of the various lifecycles of the employee.
For example, in the early stages of his or her career, the younger employee may be primarily concerned with protecting family members and ensuring adequate education for their children. Likewise, retirement planning for younger people will focus on long term profitability, but from a later age onwards it will switch to a less volatile asset class.
And what about that mobile worker, whose needs are particularly complex? Individualised defined contributions savings plans can meet his need for retirement security, especially as these plans can be easily adjusted when a mobile worker moves from one country to another. He or she will also need assurance that they and their families will be covered for health purposes in any location, hence employee benefit plans for mobile workers generally include health cover.
Meeting the need
The move to flexible solutions presents new challenges to benefits providers. To be successful, employee driven solutions must be supported by employee access to an efficient web facility that allows them to monitor and manage their plans. It also requires a constant flow of quality information about the performance of their assets, as well as education to help them assess the various options available and make the right choices.
With employees becoming increasingly wary of accounts showing pension obligations not fully segregated from the employer’s other assets, competitive advantage will go to those employers that can demonstrate a clearly viable solution. For providers of pension funds or insurance solutions, this translates into being able to demonstrate financial strength in a sustainable way, with more explicit and regular reporting.
Having local knowledge and experience is also critical to ensuring that employee benefit needs are met in the most cost effective way. For the Swiss Life Network, it is important to draw on the local expertise of network partners in every country where its clients have operations. By closely monitoring members of the network and building long term relationships with both client and partner, Swiss Life is able deliver seamless, individualised solutions.
“Take the case of mergers, acquisitions and divestitures,” notes Schmid. “Most countries regulate employee benefits to ensure continuity in such cases, but it can be very country specific as to the extent to which the level of benefits can be adjusted with or without consultation, discussion or even securing the agreement of the employees involved. Local knowledge is invaluable in allowing us to handle these international commercial transitions smoothly and efficiently. Experience shows us that integrations where due consideration is given to providing continuity for all employees involved normally have a higher success rate.”