Employee benefits: assist staff, don’t assume knowledge

With South African consumers coming under increasing economic pressure, many employees are questioning the real need for salary deductions such as provident funds. To ensure that its employees not only appreciate the value, necessity and benefits of these compulsory deductions, BDO Spencer Steward recently launched a series of in-house workshops to educate staff about their benefits package, and how this has been tailored specifically for them to meet present and future needs.

Cindy Wilson, director of BDO Spencer Steward Employee Benefits (Gauteng), explains that even though most of the firm’s employees are financially astute, one cannot assume they necessarily have the information they need to understand their benefits package and the implications thereof. “As the fifth largest professional services organisation worldwide with 700 staff members in South Africa alone, we have a real responsibility to ensure that our employees are not only prepared for retirement and covered for any accidents or other eventualities, but understand why these benefits have been put in place, how they work and what the benefits are.

With BDO Spencer Steward offering a comprehensive benefits package comprising provident fund, risk management and investment, Wilson’s focuses on each element of the package, outlining the rationale behind the choice of each. “It’s important to deal with common misperceptions that staff might have especially regarding one’s provident fund and disability cover. It’s also critical that staff understand what the products actually offer, and how they affect or complement individual policies they might have in place.”

Wilson uses the BDO Spencer Steward provident fund – a “forced saving” of 15% each month – as an example of a product often misunderstood. “Employees are often tempted to access this money earlier to buy a new car or fund an overseas trip, without fully appreciating the consequences. This is why we need to give them the facts about retirement and living longer, while emphasising the tax benefits of a provident fund, as well as other advantages thereof compared to a retirement annuity for example.”

What many staff don’t appreciate is how the firm’s package has been specifically tailored for employees. “Because staff have such diverse investment requirements and risk profiles based on their ages and lifestyles, we found that having a balanced fund for all was not appropriate. Offering staff an individual investment choice was also more expensive with increased administration fees, and staff frequently making unwise choices. We have thus selected a lifestyle portfolio investment where investment allocation is determined by the age of the member. This has been found to be the most cost-effective and appropriate option.

While providing one’s staff with a comprehensive benefits package is arguably a sign of an employer that cares, this in itself is not enough. Only by going that extra step and empowering staff with an understanding of the package, will one create both an appreciation of the actual benefits themselves, and the employer. A win-win situation for all concerned.