Provide your employees with company retirement plans to attract and retain the best talent, survey says.
Providing employees with a formal retirement savings plan will significantly improve a company’s ability to attract and retain the best staff, according to research released today by Zurich International Life.
In a survey of 1,000 UAE residents, almost two-thirds of respondents (58 percent) said that they would be more inclined to stay with their current employer or join another company if they were provided with a corporate retirement plan. Western expat employees (71 percent) were the most inclined to remain loyal to their employer if they provided a retirement saving scheme.
The results will make interesting reading for companies across the UAE that are experiencing intense competition for the best talent. The strengthening economy, greater investment and the development of projects such as Expo 2020 are increasing demand for highly skilled workers in the UAE, which are in short supply across the Emirates.
The research also found that other employee benefits would also help to retain and attract top talent. The provision of life insurance would encourage 35 percent of UAE employees to either stay with their current employer or join another company. Meanwhile, critical illness cover would be valuable loyalty tool among 31 percent of employees.
According to UAE Labor Law, employers do not have to provide retirement saving schemes for their employees. Instead, employers must provide an end of service gratuity (‘gratuity’) on termination of employment if the employee has completed one or more years of continuous service. The gratuity payout is dependent on length of service and is linked to the basic salary.
There is also no legal obligation for a company to accrue the funds required to payout their employees’ gratuity liabilities. This is leading to many employees to lack confidence in the system with only half (53 percent) believing that their employer has saved the funds required to pay their gratuity
The alternative is for companies to set up a corporate retirement savings plan for their employees. It can incorporate the existing gratuity obligation but built within a more structured savings vehicle that can act as a retirement fund and more effective employee retention tool.
Peter Cox, Head of International Pensions at Zurich International Life, said that the provision of corporate retirement savings plans could be a “secret weapon in the quest for the talent”.
“Our research clearly shows that employees want their employers to provide a retirement savings plan as the end of service gratuity is not an adequate retirement savings vehicle. Employers that listen to this demand will find they are rewarded with greater loyalty.
“We have seen some forward-thinking companies set up savings plans for their employees in recognition of the need to move beyond a simple promise to pay a gratuity to providing a true employee benefit. It has enabled these companies to become ’employers of choice’ with significantly improved recruitment and retention efforts.”