The pension crisis has been a headline in the news for several years now, and yet 76% of employees surveyed in a 2020 Mercer study do not have access to a pension or saving vehicle with their current employer.

More and more employees are becoming aware of the fact that their end of service gratuity is not going to fully fund their retirement. Furthermore, they haven’t created enough savings of their own to live on. As they approach retirement, their worry is growing.

And what is the cost of that worry? According to Mercer, it’s about 5% of payroll. Not only that, when employees perceive a lack of concern from their employers about their financial wellbeing, it results in lower morale and retention.

On the other hand, the survey shows that employees who feel secure about their financial security feel a greater satisfaction at their job, more loyalty toward their employer, and are less likely to leave.

This means the company that offers long-term support for employee retirement has an edge over other companies in attracting and retaining talent.

So how can companies set themselves and their employees up for success in the future?


1. Early intervention and adjusting mindsets

Younger employees are often so far from retirement that they don’t take the time to plan for it. Older employees may feel overwhelmed and unable to address the issue. There are still many employees who are under the misconception that their end of service gratuity will cover them throughout their retirement.

It’s important to address employees’ mindsets as early as possible so they can begin saving and investing for their futures.

Employers can be up front about the limitations of the end of service gratuity. They can take the time to be clear about the importance of early saving and investing for the younger employees. For the older ones, they discuss the realities of impending retirement and the possibilities available to them for saving and investing.


2. Create clear retirement savings goals

The idea of saving for retirement can seem daunting, maybe even impossible. Companies can empower their employees through their Total Rewards Teams or with specialised support. Independent, qualified organisers, like Steve Cronin from Simply Dead Saving, can help out. They run workshops on what final number employees should be aiming for. They then mapping out monthly and yearly goals based on the age of the employee.

A clear map toward retirement can instil hope and confidence in employees. Not only that, it allows employers to partner with their employees in a way that builds trust and loyalty.


3. Offer investment counselling

There are a lot of myths and misperceptions around the idea of investing. Investment counselling or workshops can give employees guidance on how to invest their own savings in a way that doesn’t require too much of their time and energy.

Employee age should be taken into account when advising on higher risk investments. However, overall, employees will worry less about their retirement knowing that their money is growing even as they work. This equates to an increase in productivity, morale, and retention.


4. Evaluate and evolve end of service benefits programmes

When companies don’t have a secure fund for their EOSB programmes, they are risking their employees’ futures. 88% of companies surveyed in the Willis Tower Watson Survey fund their EOSBs from company assets and not through a secure trust.

If anything happens to the company that year it prevents them from having enough assets to pay the EOSBs. Employees are at risk.

Many DIFC companies are combining voluntary savings plans with mandatory DEWS enrolment. This gives companies an edge when it comes to employee recruitment and retention. And it allows employees to have clarity, visibility, and choice when it comes to their retirement savings.

The UAE has long attracted expats due to the tax-free status and the quality of life

However, more and more of those expats are staying longer, making the UAE their home, approaching retirement, and growing worried about their future. Support your employees’ retirement planning, potentially combined with enhancing your EOSBs. Regain the trust of these employees and ensure continued growth for your company. Learn how by contacting us today.