Offering a retirement fund to your employees may not be mandatory, but it positions you as a people-centric company.
The ways in which companies approach top talent can vary from sector to organisation to country, but one thing remains consistent –an attractive value proposition is the best way to attract and retain the best talent. In a competitive market such as South Africa, where skills are in short supply and demand continues to rise, employees are the ones making the decisions about which company they will choose to work for. They are also more interested in working for companies that invest in them, their growth and their futures.
According to Gallup, organisations can improve engagement by meeting their employees’ basic needs and making improvements to employee benefits. Those companies that don’t tend to suffer from high churn and low engagement.
Companies are critically looking at the perks and benefits they offer, including retirement funds, as a way of attracting the best talent. If companies want the best talent, they need to offer the best benefits, and a retirement fund is a superb platform from which to build employee engagement and loyalty. This not only recognises the employees’ need for security in their future, but shows that the business is interested in that future.
Of course, it isn’t compulsory for companies to offer a retirement fund, but doing so can add immense value to employees. Currently, very few people save for their old age and most won’t have enough money to live on when they decide to retire. It’s a problem that affects many layers of society as people fail to recognise the importance of saving now for a secure retirement. Organisations that provide a retirement fund to their employees are giving them an opportunity to build a solid foundation for their old age.
There are some aspects of investing into a retirement fund that employers need to consider at the outset, however. Legislation stipulates that the benefit be offered it to all employees, not just a select few, to ensure the company remains compliant. Additionally, it’s essential to educate employees on how the fund works and what they need to consider when it comes to saving for the future. One retirement fund on its own is not enough to ensure a person is set up for their old age, so show your employees what additional steps they need to take to protect their lifestyle.
The contributions to a company retirement fund are made from both the employer and the employee, not just one or the other, and the percentages each side contributes can vary. The fund must include a risk portion that makes provision for funeral, death and disability.
If you offer a retirement fund to your employees, you’re definitely ahead of the game when it comes to caring for your people. But it is important that you ensure your company policy is aligned with regulation throughout, otherwise you may do your company and your employees a disservice.
Besides compliance, companies should also ensure that their employees understand how their retirement fund payments are affected by a 13th cheque or bonus (if the company offers one), what it means if they pay their bonus into their retirement fund, and how they need to supplement the fund to ensure their financial security on retirement.
Work with your employees so that they get the most from the retirement fund and are assured that their needs and personal choices are catered for. People are far more interested in bringing their skills to a company that recognises their value, and a rich bouquet of employee benefits customised to suit their individuality is one way of showing that your business does exactly that.
Nicol Myburgh is the Head of the HCM Business Unit at CRS Technologies.