Employee benefits for a multi-generational workforce
Today’s workforce is incredibly diverse — especially when it comes to age. As an employer, you may have employees ranging from the ages of 19 to 59. From Generation Z to the Baby Boomers, we are seeing younger generations enter the workplace while older individuals are opting to work for longer. Employers are often faced with managing a multi-generational workforce, and they all want and need different benefits. Determining suitable solutions can help them invest in their future and may benefit future generations too. The added benefit for employers is that offering quality benefits, enables your business to attract and retain top talent, no matter what their age.
While this may sound like an overwhelming (and expensive) endeavour, most employers also understand that having a contented staff complement is important, and part of achieving this involves providing adequate employee benefits. It is possible to meet both your company’s goals and employees’ needs.
Benefit needs for different generations
Let’s have a closer look at the different life stages and/or generations within a typical work environment:
• Generation Z (born in 1996 and after) is typically starting out in their career, so they are either in their first job or have job-hopped to three or four roles within a short space of time. It is crucial to communicate the importance of preserving their employee benefits to this generation, especially for those moving from job to job, so they can reap the rewards from compounding their savings over time.
• Millennials (or Generation Y, born between 1977 and 1995) are generally a bit more settled. They are, however, still striving to excel in their careers, which means they too may change jobs often, making the preservation of benefits an important consideration. This group is also earning more, so they can contribute more to their retirement funds.
• Generation X (born between 1965 and 1976) is more established in their career. This generation is more focused on growing their wealth. They may want to find out about having more investment choices, depending on their retirement fund rules. This generation likely has dependants, so other benefits such as healthcare and risk benefits may also be a priority.
• Baby Boomers (born between 1946 and 1964) are at or nearing retirement and will likely seek benefit counselling. It must be noted that this benefit counselling, which retirement funds must provide, does not include financial advice and neither does it consider broader financial planning needs. It is therefore imperative to communicate the importance of having an individual assessment done by a financial adviser.
The above illustrates how different generations typically have different circumstances and why it is imperative to know which employee benefits will speak to the life stage of each generation.
Your employee benefit plan should have a purpose that is clear to employees. Your plan needs to reflect your company’s values and must be clearly communicated, explaining not just the details of the plan, but the purpose and intent behind it. Employee engagement and a proper communication plan around your employee benefit value proposition will help with a contented staff and your employees will know that they are valued and supported.
How to determine your employee benefit plan
You can have various benefits as part of your employees’ conditions of employment, including membership of a retirement fund, healthcare benefits or group life insurance benefits. This also means that your employees’ remuneration packages may include certain contributions towards these benefits.
• Retirement fund – depending on the employment contract, you and your employees can both make contributions to a retirement fund. In terms of section 11F of the Income Tax Act, these contributions can be deducted from the employees’ income for income tax purposes, subject to certain limitations. This provides them with a tax savings benefit.
What is important to determine is whether the rules of the retirement fund allow for certain adjustments – for example, flexibility in contributions and investment fund choice, or topping up group life insurance benefits. Then, ideally with the support of a financial adviser, employees may consider how this will address their financial objectives and, should there be a shortfall, how broader financial planning may resolve this.
• Group life insurance benefits – these are provided by long-term insurers and could include life cover, lump sum disability, income disability protection, dread disease and funeral benefits.
Most of these benefits will be calculated as a multiple of your employees’ annual salaries. The premiums paid for these benefits are a taxable fringe benefit for the employee but may be treated as a tax deduction for the employer.
Knowing your employees
Your business is unique. Whether your goal is to attract top talent, provide benefit choices or manage costs, having a customised business solution to meet your company’s employee benefit plan vision is possible. If you understand your employee demographics, you are a step closer to having a complete view of who your employees are and what they need, and a qualified financial adviser can assist in the process of offering both you and your staff a chance to create financial security for themselves.