sme monitor infographic final
TRANSCRIPT
OLD MUTUAL SME EMPLOYEE BENEFITS MONITOR 2015
Valuable employee benefits insights into key trends, issues and
challenges of SA’s SMEs
SMEs hold the key to SA’s socio-economic development via
employment opportunitiesOf value to all stakeholders
in our country’s future
Both parties responsible for staff well-being50% 40%
DECISION MAKERS EMPLOYEES
WHO IS RESPONSIBLE FOR EMPLOYEE BENEFITS?
The findings are relevant to all businesses with an
entrepreneurial spirit
of decision makers feel that SMEs have a higher staff turnover
than larger business
35%
Respondents believe that most people will need between
70% and 89% of their current salary as income
when they retire
of SME staff believe they will be in a position to self-fund retirement
ONLY 54%
64% DECISION MAKERS69% STAFF
The majority of SME decision makers and staff believe that the employee benefits offered by a business play an important
part in attracting employees
If you’re looking for more information, please visit
www.oldmutual.co.za/SMEMonitor
Research was conducted by Livingfacts and produced for Old Mutual
of decision makers in SMEs believe that these businesses attract a different profile of staff member than large corporate organisations.
84%
of SME employees agree that it is unlikely that they will be retrenched. Confidence in their retirement plan is average at 63%, and most do not feel that they are in a better position financially than they were one year ago.
77%of decision makers felt that SMEs have a higher staff turnover than larger businesses – the reasons:
SMEs are unable to compete with corporate salary packages.
SMEs are unable to offer large company benefits.
35%
79%
73%
of staff say it is different working in an SME.
71%
100 80 60 40 20 0
Think I will stay in my job for at least the next year
Think it is unlikely I will be retrenched
Confident I am able to make good financial decisions
Confident about my financial retirement plans
Compared to one year ago my personal financial situation is better
Feel confident about the South African economy
% Agreement
81
77
77
63
53
47
KEY DRIVERS OF SMEs’ DECISION TO OFFER EMPLOYEE BENEFITS
SMEs’ KEY DRIVERS OF WHICH EMPLOYEE BENEFITS TO OFFER
1. Company Cash Flows
2. Mindset of Owners: Social responsibility or a view that staff leave
3. Need to Attract and Retain Skilled Staff
4. External Pressure: Legislation or Union
5. Stage of Business
1. Who Drives The Decision: Employer vs. staff, Broker influence
2. Who Drives Appeal to Staff: Employer vs. staff, Broker influence
3. Knowledge & Education: Decision makers, Broker influence
4. Simplicity of Implementing and Managing
5. Legislation or Industry Requirements
6. Affordability: Lower contribution, Who pays
DRIVERS OF EMPLOYEE BENEFIT ENGAGEMENT:
DRIVERS IN CHOICE OF BENEFITS:
DO POTENTIAL STAFF CONSIDER EMPLOYEE BENEFITS?
Decision makersStaff
64%69%
SHOULD RETIREMENT FUNDING BE A PRIORITY FOR SMEs?
Decision makersStaffBrokers
IS RETIREMENT FUNDING ON THE AGENDA OF AN SME?
HOW MANY OFFER ANY BENEFIT?
Decision makersStaffBrokers
72%63%
Most brokers believe it’s less
than 50%
HOW MANY OFFER RETIREMENT FUNDING?
Decision makersStaffBrokers
60%51%
Most brokers believe it’s less
than 50%
79%90%90%
YES 34%
YES 53%
NO 47%
YES 48%
NO 52%
NO 66%
Decision makers
Staff
Brokers
The majority of decision makers (64%) and SME staff (69%) interviewed believe that the employee benefits offered by a business play an important part in attracting employees – the reasons for this belief include:
Recognition of the need for retirement saving – among employees older than 35.
An expectation by skilled staff that employee benefits will be provided by their employer.
A widespread requirement for funeral benefits.
Company has provided adequately for employee well-being
42% 37%DECISION MAKERS EMPLOYEES
PROVISION OF EMPLOYEE BENEFITS BY SMEs
Employees need cash more than benefits thus don’t deserve this
But most employees do not have a savings mindset
Because of economic pressures, many employees accept jobs even if these don’t
offer them the full benefits they desire
EMPLOYEE BENEFIT PREFERENCES AMONGST STAFF
Employees showed a clear preference for retirement funding and medical cover as the two most important employee benefits.
Funeral cover was the third most sought after employee benefit.
100 80 60 40 20 0
2 – 7 Million
7 – 13 Million
13 – 31 Million
31 – 51 Million
51 – 101 Million
101 – 200 Million
% Responses
57
65
76
83
85
87
100 80 60 40 20 0
10 to 20
21 to 50
51 to 100
101 to 200
% Responses
59
78
78
86
The provision of employee benefits by SMEs increased as the turnover and staff complement of these businesses went up.
100 80 60 40 20 0
Retirement Fund
Medical Aid
Funeral Cover
Disability Cover
Life Assurance
Income Protection
Critical Illness
Education Benefit
Special Sick Benefits – Such as HIV, TB, Cancer
% Responses
92
82
17
13
12
4
4
4
2
BENEFITS OF TOP THREE SOUGHT AFTER EMPLOYEE BENEFITS FOR STAFF AND COMPANIES
BENEFIT TO COMPANY
BENEFITS TO EMPLOYEE
• Makes the company more attractive
• Satisfies a moral obligation
• Rewards long service• Provides security• Forced savings
• Makes the company more attractive
• Limits sick leave/increases productivity
• Improved healthcare
• Makes the company more attractive
• Fewer staff loans• Satisfies a moral obligation
• Reduces financial burden of funerals
RETIREMENT FUND MEDICAL AID FUNERAL COVER
The percentage of SMEs offering some type of group retirement funding differs significantly by turnover. For companies
with a turnover of less than R13 million less than 50% offer
retirement funds. 70% of companies with a turnover of R50 million or more offer such retirement funds to their employees.
66% of decision makers, 47% of staff and 52% of brokers believe that retirement funding provision is currently NOT on the
business agenda for most SMEs in SA.
Companies with 20 or more employees consider offering a group
retirement fund.
Once companies have been in business for 15 years or more they appear more
likely to offer retirement funds.
Shared equally between employer and employee
59% 68%DECISION MAKERS EMPLOYEES
RESPONSIBILITY FOR RETIREMENT FUNDING:
15 years
Asked whether SMEs should be making the provision of retirement funding to staff a business priority,
79% of decision makers said that they should, while 90% of staff and 90% of brokers agreed.
SME STAFF WHO ARE NOT ADEQUATELY PREPARED FOR RETIREMENT SAY THEY WILL RELY FINANCIALLY ON THE FOLLOWING PEOPLE/INSTITUTIONS TO SUPPORT THEM ONCE RETIRED:
The main factors that SMEs believe have the impact on members not preserving their retirement benefit are as follows:
SME decision makers listed the following as their primary reasons for selecting a given retirement fund service provider:
of SME decision makers and staff surveyed agree that preservation of retirement savings is important.
88%
of SMEs believe 80% or more of staff take all or most of their benefit in cash.
50%
CHILDREN
FAMILY
GOVERNMENT
COMBINATION OF CHILDREN AND
GOVERNMENT
CONTINUE TO EARN INCOME
14%
26%
16%
26%
4%
Blue collar staff in the organisation have a stronger reliance on government.
100 80 60 40 20 0
Desire to access cash
A lack of awareness of preservation options
Lack of advice on how to preserve
Withdrawal benefit is too small to preserve
Fear of making the wrong decision
Cost of transferring to another fund
% Responses
81
59
58
57
50
40
of SMEs offering retirement funds say these include member level investment choice.
There is an even split between SMEs choosing to deal directly with service providers (52%) for their employee benefits requirements and those who choose to work with brokers (48%).
A third of the SMEs offering this choice say that more than 90% of their employees prefer to select the default investment option.
39%
% Responses
12245788
101010
182020
2527
34
100 80 60 40 20 0
Asset classes
Management teamSize of company
Education/Communication to staffInvestment philosophy
Service provided to company
Flexibility
Performance
Track record
Reputation
Fees chargedFinancial stability/Stability
Service provided to staff
Range of choice of investment
Skills and expertise
Advice/recommendation of consultants
Ability to provide a total packaged service
Strong influencer not to preserve
Strong influencer to preserve
MOST OF THE SME DECISION MAKERS BELIEVE THAT THEIR BUSINESSES HAVE UNIQUE REQUIREMENTS IN TERMS OF THEIR RETIREMENT FUND SOLUTION.
Old Mutual is a Licensed Financial Services Provider
COST• Lower costs/
cheaper (53%)
PRODUCT• Flexibility in the
make-up of the product (30%)
• Simplicity/easy to understand (23%)
• Being able to add options on when needed/or afforded (16%)
• Automated or very easy decision making with regard to investment choices (5%)
ADMIN• Easy to implement
(16%)• Low administration
burden (14%)• Excellent admin-
istration and claims process (11%)
RETURN• Growth on
retirement fund/good growth/good returns/return on investment (9%)
• Secure/safe/not too risky/reliability (5%)
PRESERVATION• A way to limit
withdrawals/taking the cash (7%)
EDUCATION• Education for
staff (17%)
UNIQUE REQUIREMENTS
11% Don’t know53% Yes36% No
Those SMEs that offer retirement funds demonstrated fair levels of confidence in those funds and their providers, but not all think they will be adequately provided for:
Staff of SMEs that offer retirement funds largely mirrored these confidence levels. There is room for improvement in terms of staff confidence in the ‘adequate provision’ and ‘claims process ease’ indicators.
COMPANY RETIREMENT FUND WILL PROVIDE ADEQUATELY
ADMINISTRATION IS DONE PROPERLY
INVESTMENT RETURNS ARE IN LINE WITH EXPECTATIONS
COSTS ARE REASONABLE
67
84
78
76
DECISION MAKERS CONFIDENCE INDICATOR PERCENTAGE RATING
COMPANY RETIREMENT FUND WILL PROVIDE ADEQUATELY
CLAIMS PROCESS IS EASY
ADMINISTRATION IS DONE PROPERLY
FUND IS EASY TO UNDERSTAND
65
69
78
75
STAFF CONFIDENCE INDICATOR PERCENTAGE RATING
For more information visit www.oldmutual.co.za/SMEMonitor
The primary requirements were listed as follows: