Knowing when to start offering employee benefits can be tricky which is why we are sharing a few suggestions from our side:
When you have over 50 employees
We have walked you through some of the advantages of providing benefits. The right time might be sooner than you think. Our research has shown that 50 is the tipping point where the cost-benefit factor clearly proves that employee benefits make financial sense from a cost perspective.
If you’re losing talent (or, ideally, before you do)
While 50 employees are the tipping point to start offering benefits, if your company reaches a point when you are struggling to retain and attract star employees, it’s time to offer benefits. Do your research and see what other companies of similar size in your industry are offering.
Employee benefits will no longer bear a heavy burden on the employer. The administration has been significantly reduced since the introduction of Umbrella Funds. This means the ultimate fiduciary duties lie with the Pension Fund trustees, at a higher level, and not at an employer level.
The employer responsibilities have been reduced to the following:
- The setup of an advisory committee, consisting of employer and employee representatives
- The increased payroll administration of accounting of the benefit contributions
- The ongoing fiduciary duty to protect the financial interests of your employees. This means to ensure that the benefits selected are legitimate
What does this ongoing fiduciary duty mean in practice?
On a practical level, to fulfill your fiduciary duties to your employees, consider the following:
- Conduct appropriate due diligence into the preferred fund or funds before you agree to participate. This should include a review of the governance, service, administration capability and costs of those funds, to ensure that members will receive good service and value-for-money.
- Assess the appropriateness and cost-effectiveness of the investment arrangements in light of the profile of your employees and, where necessary, carefully consider an appropriate default investment portfolio for your employees.
- Ensure that adequate and appropriate communication is provided to members so that members understand the benefits and costs associated with the fund. In addition, ensure that there is adequate ongoing member communication and engagement around overall fund performance and appropriateness.