Aļona JurĻele: Factors to consider when choosing a ‘basket of benefits’ for employees

Since 2020, when the Covid-19 pandemic started raging in the world, each of us has felt the changes in various areas of life, and the work environment is no exception for many. The pandemic encouraged, among other things, to pay more attention to the balance of work and rest, to take care not only of physical, but also of emotional health, and more and more companies in Latvia began to strive for the balance of these two elements as well. At the moment, we can clearly see that employees are becoming more demanding of various motivational tools, or so-called benefit baskets, and expect not only immediate benefits, but also long-term solutions.

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Employee health insurance is still one of the most popular additional benefits, however, both small and large companies often choose to also make long-term savings for employees in pension level 3 or life insurance with savings. Quite often, employers give the employees themselves the opportunity to choose which of the two savings instruments they want to direct their money to.

These motivational tools make it possible to take care of the future welfare of existing employees and at the same time strengthen the company’s position in attracting new employees. What should be considered before adding long-term savings solutions to the basket of employee benefits and how to find the right one for your company and employees?

Know your employees

First about the needs of employees. In my experience, I have often heard employers say that only payslips are important to employees, but I tend to disagree with this statement. Of course, fair and competitive pay is the foundation of the foundation, but in recent years we have clearly seen that it is not enough. Even before the pandemic, the results of our survey showed that fringe benefits are valued – 59% of respondents aged 30-55 admitted that they would be more loyal to their current employer if it provided them with retirement savings.

If we look in the direction of Western Europe, there pension savings have been an almost self-evident part of the basket of “additional benefits” for decades. 2022 data from a SHRM survey of employers in the US and Europe shows that saving for employees’ future well-being is the second most important “fringe benefit.” Savings were marked as important by 82% of respondents, which is 27 percentage points more than in 2020/2021. in the annual survey. Savings culture in Latvia is weak, as evidenced SEB researches, only 27% of the actively employed population of Latvia state that they are capable of making regular savings for the future. So this is one area where employer support can be particularly valuable.

Although such a recommendation may seem almost self-evident, I would like to emphasize it – the first and most important step in choosing the most suitable employee motivation tools for the company is not only to identify, but to really know what kind of people work in the company. I encourage you to talk to employees about their future plans, dreams, existing savings tools and, of course, age and salary. This will allow you to better understand what their daily challenges are, their expectations towards the employer and what solutions will be really useful. Thus, it will be easier to choose between two types of long-term savings – life insurance and pension at level 3.

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The 3rd level of pensions allows targeted savings for pension years in order to have additional funds in old age in parallel with the 1st and 2nd levels of pensions. On the other hand, in life insurance, funds are usually accumulated for a certain period of time, after which they are paid out to the employee.

Social responsibility of the employer

Now about the needs of the company. The last few years have clearly demonstrated that the employer’s responsibility for employees does not end as soon as the office doors are closed – from fair pay, work-life balance to additional holidays and long-term savings. These are all ways to improve the daily life of employees, because by reducing their domestic worries about today and the future, it is possible to increase peace of mind. And an employee whose mind is less burdened by everyday worries is likely to be both more productive and more proactive. Building long-term savings has long ceased to be a gesture of good will on the part of the employer, but a responsibility towards the company’s employees. In addition, according to our survey, 74.5% of employees highly value employer contributions to their future savings.

What other challenges do long-term motivation tools help address? Our experience shows that companies often choose to use long-term savings as a tool for rewarding employee loyalty, for example, ensuring participation in a long-term savings program after the employee has worked for the company for a certain period of time, at least half a year, a year.

It is clear that the basket of motivational tools of competitive and socially responsible employers should include both short-term or immediate benefits and long-term solutions that help strengthen employee loyalty. Finding a balance between the two can help by researching employee needs and learning about the company’s challenges, but it’s the savings that are one of the most valuable components of compensation in the long run.

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2023-06-10 11:00:08