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In terms of lifetime savings, many employers think that fulfilling their end of service gratuity obligations will be enough to attract, motivate and retain key personnel, even when assets are not specifically set-aside for this purpose. During this session Peter looks at whether individuals actually agree with this approach, their view of gratuities and the value placed on them. Evidence currently shows that individuals are not saving enough for their later life, a problem compounded by the fact that they will be living longer, leaving them with the difficult choice of either saving more or deferring their retirement. Peter explores a way employers can differentiate themselves by adopting a more paternalistic approach to lifetime savings Peter Cox, Head of International Pension Plan Sales APAC & ME, Zurich
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Corporate savings The secret weapon in the quest for talent
Tuesday 21 October
Peter Cox Head of International Pension Plan Sales Asia Pacific & Middle East
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Growth supported by a number of megaprojects that will boost investment and employment
Solid economic recovery
Optimistic about economic recovery
UAE
5.2% 4.8% 4.2%
0.8%
Actual 2013 Expected 2014
Economic growth (GDP) Trading Ecomonics (UAE)
UA
E
UA
E
US
UK
51% of employers increased headcount in 2013 Compensation and benefits trends in the GCC 2014 Report
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Job mobility is on the increase
20%
40% EMPLOYERS REPORTING AN
8% TO 10% ATTRITION RATE IN 2013
EMPLOYERS REPORTING 10% OR MORE*
*Compensation and benefits trends in the GCC 2014 Report
Employees are moving on in search of better pay
Companies are struggling to retain employees
Attrition rates are increasing:
Fight for talent as a result of economic recovery
Is simply increasing salary the answer?
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Competitive remuneration is vital for attracting and retaining the best talent
Due to a trend of individuals staying longer in the UAE, average length of service has increased and with it – average salary
The Towers Watson End of Service benefits survey 2014 sees a greater number of companies expecting their employees to stay longer – 5 to 10 years on average Both factors impact the End of Service Gratuity (EOSG) calculation
Gratuities are becoming more financially significant
Source: UAE Ministry of labor and salary inflation data
4.7 6.10
2008 2014
Average length of service (years)
10,120 14,380
2008 2014
Average monthly salary (AED)
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Length of service
Salary
66%
140%
+ increases the EOSG entitlement by
and this jumps to
* Towers Watson, End of Service benefits survey 2014
How much of this increasing liability is funded?
Funded
Companies indicating they settle employees’ benefits as they become due from company assets*
16%
84%
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or KEEP
CALM AND
CARRY
ON
TURN AN
UNFUNDED
LIABILITY INTO A
RECOGNISABLE
BENEFIT? ?
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We asked 1,000 UAE residents for their views on EOSG
The employee view
Do you know how to calculate your end of service gratuity?
59% are not aware
Do you believe your employer has set aside the necessary funds required to settle your end of service gratuity?
53% said yes
What do you plan to do with your end of service gratuity when you leave your current job?
72% plan to save it
Do you believe that the end of service gratuity provides enough funds to cover your retirement needs?
83% said no
Zurich YouGov survey July 2014
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Which of the following employee benefits would make you more inclined to stay
with your current employer or join another employer if they were included within
your package?
Do employee benefits improve retention?
Total Arab Expat Asian Westerner
Savings/Retirement plan
Life insurance
Critical illness cover
None of the above
Zurich YouGov survey July 2014
58%
35%
31%
21%
53% 58% 71%
21% 42% 39%
29% 35% 35%
27% 17% 19%
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What aspects of these plans can help you to achieve your recruitment and retention goals?
Eligibility rules
Employer contributions
Matching employee contributions
Vesting rules
Economies of scale
Benefits visible online
Retaining employees through corporate savings plans
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Incentivising saving
Make savings ‘service incentivised’ through employer contributions
EOSGs are a retention tool – build on the accrual uplift after five years
For example, create a vesting rule at the five-year point in relation to
employer savings
Make your employees think very carefully about what they are
potentially giving up if they leave
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A corporate savings plan can be an excellent way to top-up EOSG obligations
Cost-effective
Access to a range of investments with potentially better returns
Straightforward administration
A ‘non-earmarked’ account gives funding flexibility
Can also be used to fund EOSG liabilities
Funding EOSG liabilities
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Individuals are not saving enough for their later life and are living longer
So save more or spend more years working?
Through corporate savings, employers have an opportunity to:
support their employees’ future financial security
differentiate their company as an employer of choice
and, ultimately, to succeed in the quest to attract and retain key talent.
Any questions?
Standing out from the competition
1
2
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Important information Zurich International Life is a business name of Zurich International Life Limited. Zurich International Life Limited is fully authorised under the Isle of Man Insurance Act 2008 and is regulated by the Isle of Man Government Insurance and Pensions Authority which ensures that the company has sound and professional management and provision has been made to protect planholders. For life assurance companies authorised in the Isle of Man, the Isle of Man’s Life Assurance (Compensation of Policyholders) Regulations 1991, ensure that in the event of a life assurance company being unable to meet its liabilities to its planholders, up to 90% of the liability to the protected planholder will be met. The protection only applies to the solvency of Zurich International Life Limited and does not extend to protecting the value of the assets held within any unit-linked funds linked to your plan. The International Pension Plan is sold through Zurich International Life. Zurich International Life is not authorised to offer insurance products for sale in the United States. Zurich International Life Limited is registered (Registration No. 63) under UAE Federal Law Number 6 of 2007, and its activities in the UAE are governed by such law. Materials are not intended as an offer to invest and do not constitute an offer or a solicitation of an offer to buy securities in any other country or other jurisdiction in which it is unlawful to make such an offer or solicitation. Calls may be recorded or monitored in order to offer additional security, resolve complaints and for training, administrative and quality purposes. [Only include this wording if is not mentioned elsewhere within the document] Zurich International Life Limited provides life assurance, investment and protection products and is authorised by the Isle of Man Government Insurance and Pensions Authority. Registered in the Isle of Man number 20126C. Registered office: 43-51 Athol Street, Douglas, Isle of Man, IM99 1EF, British Isles. Telephone +44 1624 662266 Telefax +44 1624 662038. www.zurichinternational.com
