The Role of Flexible Employee Benefits in Navigating Financial Strain
The first weeks of the implementation of the Two-Pot Retirement System confirmed what many employers already knew: working South Africans are under massive financial strain.
The 2024 Old Mutual Savings and Investment Monitor found that 37% of working South Africans are highly financially stressed, while 43% always worry about their debt.
Knowing that, Old Mutual expected its clients to withdraw an estimated R14.2 billion from their retail retirement products and occupational schemes when the Two-Pot System went into effect.
“We weren’t surprised at the volumes of claims,” says Blessing Utete, Managing Executive at Old Mutual Corporate Consultants.
“But what is interesting is that claims are coming from retirement fund members across all ages and all income groups. It’s a clear indication of the limited financial wellness that’s in the market at the moment. All South Africans are under financial pressure, and they need support.”
Utute believes that the Two-Pot claims volumes are a sign of things to come for employers. “Employees do not have emergency savings, which is why they’re accessing their retirement savings – despite the long-term damage it does to their retirement outcomes,” he says.
“It also highlights the need for flexibility in employee benefits. Again, let’s look at retirement savings. As an employer, how do you encourage an employee to contribute 15% of their salary towards their retirement when they can’t make ends meet today? You have to be in touch with where people are at, and you must empower them to make the changes they need to make as they move along their journey.”
Employee benefits play a central role in an holistic employee value proposition, which helps employers to attract and retain talented staff.
In fact, Old Mutual Workplace Benefits Primary Research, powered by LIMRA, found that 82% of employees are inclined to stay with their current employer because of their benefits package. Employee loyalty increases as job satisfaction, benefit satisfaction and the number of benefits offered increase.
When asked to rank their top five factors when considering a potential employer, only 27% of employees named income as their highest priority.
“This means that whilst salary is a key hygiene factor, 73% of employees also ranked something other than salary as the most important factor when considering a new employer,” explains Lindiwe Sebesho, Managing Director of Remchannel.
Having said that, 56% of employees had salary/income in their top five considerations. “Money will always talk,” says Sebesho.
“But perhaps just not as loudly as one might expect it to, especially if it’s not part of a holistic employee value proposition.”
Other top-ranked attraction factors included retirement plan, medical benefits, work-life balance and opportunity for career advancement.
In a tough economic environment, employees often face urgent and immediate financial pressures.
To help organisations navigate those realities, Old Mutual Corporate Consultants (OMCC) and Remchannel have launched Talent Vantage™, which combines Remchannel’s cutting-edge remuneration insights with OMCC’s extensive experience in employee benefits.
Talent Vantage™ helps organisations to address their employees’ short-term financial needs by setting competitive pay packages based on remuneration benchmarks that are crafted to relevant industry and national standards.
This helps companies to remain efficient while attracting top talent.
“Remuneration and employee benefits are not separate things,” says Sebesho.
“We certainly don’t see them that way – and neither do employees! They’re part of one continuum that employers can structure carefully to attract and keep the best employees.”
“Employee benefits have been too siloed and paternalistic for too long,” Utete concludes.
“The world has moved to where Talent Vantage™ is, where employee benefits and remuneration packages are structured with the big picture and the needs of all parties in mind.”
Find out more about Talent Vantage, a collaboration between Remchannel and Old Mutual Corporate Consultants, (*a division of Fairbairn Consult, a licensed FSP).
Remchannel (Pty) Limited and Fairbairn Consult FSP9328 are members of the Old Mutual Group
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