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Delivering effective employee benefits demands seeing the big picture

23 August 2016 Rowan Burger, MMI
Rowan Burger, Managing Executive for Strategy and Market Development at MMI Corporate and Public Sector’s.

Rowan Burger, Managing Executive for Strategy and Market Development at MMI Corporate and Public Sector’s.

As the retirement savings industry pushes to streamline and simplify retirement benefits, it is imperative that this is done in consideration of the other benefits that an employer provides – and not in isolation.

No retirement fund is an island. It exists as part of a far bigger financial eco-system which includes companies, industries, communities and the economy as a whole.

Rowan Burger, MMI Corporate and Public Sector’s Managing Executive for Strategy and Market Development says that understanding each separate part of this chain and how they all interconnect is essential for unlocking true value for stakeholders.

Burger believes that the default proposals extend trustee mandates beyond the member’s life in the fund; “they are markedly changing the responsibility of trustees and service providers and necessitate a paradigm shift toward a more holistic way of seeing employee benefits”.

He sees some clear upsides and some equally clear dangers in this new landscape.

The benefits are an opportunity for a focus on better member on-boarding, which could lead to more engaged, productive employees and better preservation of benefits. By allowing members to seamlessly transfer between group and individual products and ensuring continuation of insurance cover we believe the number of members who cash out can be reduced.

In his view the current landscape creates a burden on the state as the means test on grants incentivises low income workers to cash in their retirement savings. In addition, middle and higher income individuals pay more for medical, death and disability cover than they should because there is no incentive to stay healthy.

According to Burger the obvious solution lies in a genuinely holistic value proposition which takes into account the complete financial wellness of employees where health, insurance and reward programmes are collectively built to ensure cover is sufficient, savings are maximised and wellness programmes drive the right behaviour toward creating happier and healthier employees.

Most importantly, we should be trying to drive the reductions of costs by decreasing illness and death through sound risk management and wellness programmes rather than commoditising risk insurance across many industries.

“We need to find a solution that talks to the interests of each party (member, fund and employer) by delivering meaningful benefits where funding is shared across all beneficial stakeholders. All the parts must fit each other in an optimal way and ensure there are no gaps or unnecessary overlaps.”

When this eco-system is fully functional Burger believes there will be advantages all round;

• the member will benefit from real value as a result of informed decisions on cover, cost efficiencies from shared funding and relevant reward programme incentives
• the fund will benefit from a shared cost structure, potentially lower risk premiums and better claims experience as a result of healthier members
• the employer will benefit from being an employer of choice due to the comprehensive employee value proposition which has a knock on effect for productivity as a result of a healthier and more motivated workforce and the reduction of occupational health risks.

 

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