Retain talent with retirement plans

EMPLOYEE turnover is relatively high in today’s employment market, especially as the domination of Generation Y employees becomes more widespread.

Members of this group generally prioritise job satisfaction over monetary gain. They are loyal to employers who appreciate them and care for their well-being, and will not hesitate to leave their jobs if they feel that their employers are not up to their expectations.

The competition between employers to attract and retain quality talent has also become stiffer. With today’s technology, anyone can job-hunt from the comfort of their homes. Employers have no choice but to be competitive to attract and retain quality talents.

The ready availability of career fairs and headhunters who are eager to find talent add to the ease of finding a job, especially if you are a quality talent.

One way for you to stand out as an employer is to show your current and future employees that you care for their well-being. Contributing to employees’ retirement funds can be an effective way to do so. Through a corporate private retirement scheme (PRS), employers can opt to directly contribute to their employees’ retirement funds or provide payroll deduction facilities so that the employees can contribute to their own retirement nest egg.

Employer contribution

Employers can use the Corporate PRS Vesting Programme and choose the most appropriate option to reward and retain their employees. Public Mutual offers three options for employer contribution:

Immediate vesting – An unconditional scheme where employer contributions will be vested immediately to employees, who gain full ownership of the contribution as soon as the units are credited into their PRS accounts.

Straight vesting – Employers dictate a vesting period that employees must fulfil to be entitled to the contribution. All contributions will be vested to employees upon fulfilment of their individual employment periods detailed in the vesting schedule.

Revolving vesting – The vesting schedule repeats itself upon completion of each specified employment period. For example, if the vesting period is set at five years, contributions will be vested to the employees after every five years of service.

The benefits of the corporate PRS vesting programme for employers are:

Attract quality employees and enhance staff loyalty – By upgrading their compensation package with corporate PRS, employers can attract and retain quality talents and reward loyal ones.

Rights to contribution – The PRS vesting option gives employers the rights to claw back their contributions if an employee decides to leave his job before the vesting period.

Eligible for tax incentives – Employers are allowed tax deductions (up to 6% to 7% of employees’ remunerations) on contributions to PRS made on behalf of their employees.

On the other hand, the benefits of the corporate PRS vesting programme for employees are:

Free personal accident insurance or Takaful coverage – Public Mutual PRS members aged between 18 and 59 are eligible for free personal accident insurance or Takaful coverage of up to RM100,000 (subject to terms and conditions).

Protection of money in PRS scheme from creditors – All member benefits under the PRS are protected from creditors as stipulated in Section 139ZA of the Capital Market and Services Act.

Through a corporate private retirement scheme (PRS), employers can opt to directly contribute to their employees’ retirement funds or provide payroll deduction facilities so that the employees can contribute to their own retirement nest eggs.

Salary deduction

Employers can provide payroll deduction facilities for their employees to contribute to their own PRS accounts as an additional retirement savings plan.

Employees can then determine an amount to be set aside from their salary each month to contribute to their private retirement funds.

Salary deduction is one of the more disciplined ways for a person to accumulate funds for long-term financial security.

The benefits of employee contribution via salary deduction are:

Tax incentive – Employees who opt for salary deduction will be entitled to a personal tax relief of up to RM3,000, inclusive of deferred annuity payments.

PRS Youth Incentive – Employees between 20 and 30 years old who opt for salary deduction are entitled to a one-off incentive of RM1,000 from the government under the PRS Youth Incentive 2017-2018 (subject to terms and conditions).

The Corporate PRS Vesting Programme is a great tool for employers to boost their compensation package offerings to attract and retain quality talent.

For more information on how to leverage on this programme, e-mail Public Mutual’s Financial Planning and Institutional Support department at fpis@publicmutual. com.my