EMPLOYEE BENEFITS
Pension reform and government cuts increases value of company benefits to employees
Businesses that tailor their benefits to respond to the cuts in public finances occurring across the world will trim costs and give themselves an advantage in the war for talent, says Mercer in its annual "Benefits around the World Report".
Changes to state pension, health and welfare systems in many countries are creating significant challenges for multinational companies looking to manage their employee benefit programmes. Reforms, prompted by an aging population and the increasing cost of providing adequate retirement income and health services, are gathering pace in numerous countries, including Australia, Canada, France, UK and the US.
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Jean-Philippe Provost, US International Consulting Group leader at Mercer, said: “Declining public finances has prompted a general retreat in state retirement and health provision; some countries are even looking to their pension and health systems for new sources of revenue. Changes vary but include increases in retirement ages, restrictions on tax relief, reductions in benefits and increases in worker contributions.”
He added: “As governments shift the cost of benefit provision from the public sector to the private sector, employers are seeing a significant knock-on effect on the programmes they provide and employees are left wondering how to fill the gap.”
According to Mercer, there is, consequently, a greater appreciation amongst employees of the value and security of their benefits after two years of economic uncertainty and pay restraint.
Cost efficiencies
One of the key trends coming out of the Mercer research is the way in which companies are looking for cost efficiencies and value for money. Provost said: “Some are reducing benefits for new hires or introducing cost sharing while others are consolidating with third-party vendors or pooling of insurance risk to achieve economies of scale. A number of firms are taking a different approach and are introducing programmes to help cost control in the longer term such as wellness programmes and flexible benefits programmes.”
He added: “Most multinational companies are looking to deliver cost-savings one way or another but the manner in which they are dealt with will determine whether a company has the funds and strategies in place to give it a commanding position.”
Want to know more?
Title: Benefits Around the World Report, Mercer, August 2011.
Availability: To find out more and download a sample eight-country report visit www.mercer.com/bpaw.
Mercer is a “global leader in human resource consulting, outsourcing and investment services”. Mercer works with clients to “solve their most complex benefit and human capital issues by designing, implementing and administering health, retirement and other benefit programmes”. For more details visit http://uk.mercer.com.