Talk to your smaller clients about employee benefits

By: Nashalin Portrag, Head of FundsAtWork at Momentum Corporate

While many small and medium-sized employers recognise the value of employee benefits, most still see it as administratively complex and expensive. The answer to this dilemma is an umbrella fund with an option designed to address the specific needs of smaller businesses.

Employee benefits are probably not a priority for smaller employers in the current harsh economic climate. Financial advisers can help these employers to look beyond their current challenges and unlock more value from their greatest asset: their employees.

The latest Momentum/Unisa Consumer Financial Vulnerability Index (CFVI) highlights the deteriorating financial vulnerability experienced by many South Africans. The Momentum Effective Employee Index shows the negative impact rising financial vulnerability has on employees’ performance in the workplace.

Small businesses don’t necessarily have access to the resources that larger companies enjoy. As a result, the impact of declining employee productivity is often more immediate and intense in smaller businesses.

Employee benefits reduce employees’ financial vulnerability, by helping them to save for the future and offering protection from unexpected, financially-catastrophic life events. As financial vulnerability improves, financial stress reduces and performance improves.

The question is how smaller businesses can offer employee benefits, affordably and effortlessly. The answer is the right umbrella fund.

What does the right umbrella fund look like?

The right umbrella fund includes core benefits designed to address the needs of smaller employers. Delivery should be efficient and seamless, so employers are free to focus on their core business.

Affordability is critical. Participation in such an umbrella fund should not only offer all the cost-efficiencies synonymous with this type of retirement fund, but administration and investment fees should be as low as possible.

In addition to retirement and insurance benefits, the specially-designed option should provide free access to health expertise and value-added benefits that help improve employees’ physical health and “stretch their money”. The right umbrella fund also provides services that support employees and their families going through tough times.

Financial advisers are key in driving awareness of these additional benefits which, when used, can reduce some of the stressors that distract employees from their work.

Low financial literacy increases financial vulnerability. The right umbrella fund should offer counselling and communication which focuses on boosting financial literacy levels and helps employees to make smarter financial choices.

Full compliance with all regulatory requirements is also key. This includes the default retirement fund regulations designed to make sure retirement savings are invested in an appropriate, cost-effective investment portfolio and facilitate informed financial choices when employees change jobs or retire.  

The right umbrella fund should also reward businesses financially for creating a safe workplace and offering benefits that help employees to be healthier, less stressed and more productive.

Don’t wait for your clients’ employees to ask for employee benefits. Talk to your smaller clients that don’t have employee benefits about the right umbrella fund.