Business Insurance: Employee Benefits Good for Business

Savings and pension plans plus business insurance like medical insurance for employees can serve as powerful workforce incentives. In fact, 75% of employees say they’re willing to stay with a company because of its benefits programme, while 80% prefer additional benefits over a pay hike.

Employers must, therefore, be more intentional about their employee incentives and benefits programmes to maximise workforce satisfaction and loyalty. Below are two types of employee benefits employers can consider offering their employees.

Savings and Pension Plans:

Savings and pension plans are designed to help employees save for retirement. They often involve regular contributions from both the employer and the employee. The pooled amount goes into a savings or an investment-linked account.

When an employee retires (or quits), they leave with the total accumulated contributions (the employee’s and the employer’s) and any returns accrued over time. This money can fund their post-retirement lifestyle or tide them over as they transition to the next phase of their life.

Some plans, employees can bring with them to their new workplace. Some savings and pension plans pay benefits in one lump sum, and others in monthly, quarterly, or yearly allocations.

Why It Matters to Employees?

For employees, savings and pension plans offer a structured way to build a retirement fund. These plans often come with tax advantages. For instance, contributions made towards savings and pension plans are made with pre-tax dollars.

Note: While this may matter in other parts of the world, it does not make a difference in the United Arab Emirates. The UAE does not levy income taxes.

More importantly, a savings and pension plan in the workplace significantly reduces financial stress related to retirement planning. They also promote long-term financial discipline among employees.

Why It Matters to Employers?

A robust savings and pension plan can enhance a company’s appeal as an employer of choice. It can reduce turnover rates, as employees are more likely to stay with a company that supports their long-term financial goals. Additionally, these plans can improve overall employee morale and productivity.

In the UAE, specifically, an employer can use a savings and pension plan as a way to ring-fence their end-of-service gratuity liabilities. The UAE government requires employers to pay a gratuity to employees at the end of their service.

For employees in continuous service for less than one year: no gratuity

For employees who have been with the company continuously for one to less than five years: 21 days’ salary for each year in service

For employees who have been with the company continuously for more than five years: 30 days’ salary for each year of work past the fifth year

Employers and employees may agree to opt for a voluntary savings scheme instead. Participating in a savings and pension scheme allows employers to automatically and consistently contribute money to their employees’ end-of-service funds. They won’t have to scramble to fulfil their gratuity requirements when the employee is about to leave.

Things to Remember:

When designing a savings and pension scheme, employers must consider contribution rates, investment options and the potential for employer-matching contributions.

If including an investment option, make sure the fund is liquid so it’s accessible anytime an employee leaves. The fund must also have a guaranteed value. It must cover at least the employer’s and employees’ contributions and minimum assured interest earnings. Even if investment returns are not guaranteed, the capital (the contributions) must remain intact.

Employers must also assess return potential. Ideally, the returns must at least preserve capital by keeping up with a rising consumer price index (i.e., inflation). Better if they can provide a little something extra on top.

Medical Insurance:

Medical insurance provides coverage for healthcare expenses, including doctor visits, hospital stays, medical procedures, medication, and preventative care. Medical insurance is a compulsory employee benefit in many regions, including the UAE.

Employee medical insurance schemes require employers to pay a monthly, quarterly or annual premium. They are typically group plans obtained at a negotiated (discounted) rate because they cover a minimum number of employees. Employers may or may not include their employees’ families; some give their employees the option to add family members to their health insurance plan in exchange for additional premium payment.

Why It Matters to Employees?

Medical insurance ensures employees have easy access to necessary healthcare services without the accompanying financial burden. Employees with medical coverage are also more likely to seek timely medical attention, preventing minor issues from becoming major health problems.

Why It Matters to Employers?

Providing medical insurance can lead to a healthier, more productive workforce. It can also make a company more attractive to high-quality talent. In the UAE, a medical insurance plan is necessary because it is a compulsory employee benefit.

Things to Remember:

Employers must evaluate the coverage options, network of healthcare providers and premium costs. It is crucial to balance comprehensive coverage with affordability. Employers should also consider the specific healthcare needs of their workforce and ensure that the chosen plan meets these requirements.

Elevating Employee Benefits with Business Insurance:

Incorporating savings and pension plans and medical insurance into employee benefits packages can significantly enhance a company’s appeal and help it attract and retain talent. However, employers must ensure their employee benefits do not only meet the needs of employees, but also satisfy business goals.

 

Disclaimer:

CBD:

Qrius does not provide medical advice.

The Narcotic Drugs and Psychotropic Substances Act, 1985 (NDPS Act) outlaws the recreational use of cannabis products in India. CBD oil, manufactured under a license issued by the Drugs and Cosmetics Act, 1940, can be legally used in India for medicinal purposes only with a prescription, subject to specific conditions. Kindly refer to the legalities here.

The information on this website is for informational purposes only and is not a substitute for professional medical advice, diagnosis, or treatment. Always seek the advice of your physician or another qualified health provider with any questions regarding a medical condition or treatment. Never disregard professional medical advice or delay seeking it because of something you have read on this website.

Gambling:

As per the Public Gambling Act of 1867, all Indian states, except Goa, Daman, and Sikkim, prohibit gambling. Land-based casinos are legalized in Goa and Daman under the Goa, Daman and Diu Public Gambling Act 1976. In Sikkim, land-based casinos, online gambling, and e-gaming (games of chance) are legalized under the Sikkim Online Gaming (Regulation) Rules 2009. Only some Indian states have legalized online/regular lotteries, subject to state laws. Refer to the legalities here. Horse racing and betting on horse racing, including online betting, is permitted only in licensed premises in select states. Refer to the 1996 Supreme Court judgment for more information.

This article does not endorse or express the views of Qrius and/or its staff.