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Photo
Credit Image by Flickr.com, courtesy of Gary Leonard
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Are you an employer who is
worried about your high employee turnover? Do you seek to reward your best
employees in the most competitive ways? Have you considered an employee pension
scheme yet? If not, then what are you waiting for to get your name on the “Top
10 best employers” list?
Every employer’s dream is to
build a team of loyal yet satisfied employees, but one mistake employers make
is thinking that a loyal employee is one who is satisfied. Just because you are
passionate about your business doesn't mean your employees are as
well.
An employee may be loyal because
he hasn't got better employment options and not because he finds the
working conditions satisfactory. The good news here is that employee satisfaction
ultimately leads to employee loyalty. So as an employer, your primary aim
should be to achieve a high level of employee satisfaction.
Bearing this in mind, be sure to
remember that employee satisfaction doesn't require a juicy
remuneration alone. However since different individuals are attracted and
satisfied by different working conditions, it may be difficult for an employer
to decide what areas to focus his energies on.
Nevertheless, an employer pension
scheme (e.g. An Employer-Sponsored
Plan) hardly fails to put you on the “popular employers” list and if you
haven't got one, here are five important considerations you should make before
rolling out your employer pension blueprint.
Consideration #1: The level of
funding you are ready to provide
You can either choose between
having a plan that will be fully funded by you or one that will be partly
funded by employees' accumulated contributions. Either way, it is important to
decide to what extent you can finance your employer pension scheme long before
you get started.
Consideration #2: Method of
Administration
A scheme can either by insured
(i.e. By placing the scheme with an insurance company) or
self-administered (in which the scheme is managed in-house). However, when the
scheme is insured, the risks are fully transferred to the insurance company
while for the self-administered scheme, all investment decisions and risks must
be made and managed by the scheme sponsor (i.e. The employer or trustee).
Consideration #3: Scheme
membership
Who qualifies to be a member of
your scheme, full-time employees, part-time employees or contract employees?
What will be the minimum age of entry into the scheme and the age of exit (or
retirement age)? Questions such as these are to be answered before the onset of
your pension scheme.
Consideration #4: Types of
benefits provided by the scheme
A pension scheme may provide
either a gratuity or pension annuity or
a combination of both. More elaborate schemes include death benefits (payable
to dependants of the deceased), disability benefits (insurance benefits paid in
case of disability), dependant pensions (payable to widows/widowers, or
orphans) and so on.
If a pension scheme is to take up
after several years of the company’s existence, it will also be necessary to
consider past service of older employees. However, remember the more the
benefits, the higher the cost of running the scheme.
Consideration #5: No room for
trial and error
Providing a life income of some
amount to an employee who has reached the end of his economically productive
life is no easy task. This requires a lot of long term planning. Errors once
made may not be able to be corrected retrospectively, so it’s very important to
get it right the first time.
