WILL YOUR EMPLOYER PROVIDE?
Should companies provide employee benefits such as life cover and retirement funding for their staff?
Recently, the managing director of a small company asked me if I thought they should provide employee benefits such as life cover and retirement funding for their employees. Currently, the company leaves that entirely to each employee to sort out for themselves.
Given the cost and administration implications, small and even medium-sized companies are reluctant to offer any employee benefits, choosing to leave those decisions up to their employees, yet a recent FinScope survey found that when it comes to life cover and retirement funding – unless a company was providing mandatory cover – individuals were unlikely to have sufficient cover in place.
So, my response was that I thought the company was carrying a major liability by not providing for its employees. Statistically, it is unlikely that many of his employees have made sufficient provision for themselves and, ultimately, the families of the employees have some expectation that the company will provide for them.
What happens when one of his employees, who has worked for him for 15 years, is in a car accident and unable to work again?
Or is killed in that car accident, leaving a family – including young children – financially destitute? Or what happens when the employee retires and has nothing to live on except a state pension? How would he – as head of the company – feel?
Ironically, it would be easier for a large organisation, which is more likely to have employee benefits in place, to wash its hands of the situation and point the disabled employee or widower to the employment contract.
It would be much harder, emotionally, for the head of a small company who would have worked closely with the employee and perhaps met his or her children at Christmas parties to take the same line.
As a decent human being, he would feel obliged to offer assistance, and that for me is where the liability is derived. It would be a responsibility born out of emotion rather than legality.
The flip side to this conversation is to you, the reader: If your company is not providing protection or retirement benefits, are you doing anything about it? And, if not, does your family know that should something happen to you, there is nowhere for them to turn to?
Would you prefer your company to deduct money for life cover and retirement, or would you prefer to have a higher take-home pay and do it yourself?
SMS us on 35697 using the keyword COVER and tell us what you think. Include your name and province. SMSes cost R1.50