Employees fail to act on financial security - Business Works
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Employees fail to act on financial security

William J Toppeta, MetLife President
E mployees are failing to act on fears about their financial security despite a growing realisation that they need to plan for the long-term in the wake of the global financial crisis according to a new multi-country study on employee benefits from MetLife.

The report reveals a global picture of chronic under-saving, lack of retirement planning and irregular ownership of essential financial products across emerging and developed markets despite lessons of the worldwide financial crisis.

Having enough money to cover either a sudden loss in income or simply to make ends meet ranked in the top three of employee financial concerns in all countries in the study.

Key country findings
  • Australia: About a third of Australian companies that do not currently offer insurance benefits would consider offering income protection, disability and term life in the next three years.
  • Brazil: 80% of employees say that health insurance is the most essential benefit followed by salary continuation in case of illness, life insurance and health check ups.
  • India: 75% of those Indian employees who do not own any financial products through the workplace say it is because they are not offered by their employer.
  • Mexico: Over a third of Mexican employees do not know when they will retire. Mexican workers who do, expect to retire on average at age 60, with average life expectancy now at 76 years in Mexico.
  • UK: Employees are not taking full advantage of current benefit offerings from their companies. 72% of employers offer private medical insurance, but only 28% of employees take it, while 69% offer life assurance benefits and again only 28% avail themselves of this benefit.

Job security emerged as the first or second concern regarding financial security in the UK, Australia and Mexico, underscoring the potential fragility of the global economic recovery. By contrast, workers in India and Brazil are more confident about job security, indicating a potential shift in global economic power. Around 70% of Brazilian workers are optimistic about their future.

The MetLife 2011 International Employee Benefits Trends Study, covering Australia, Brazil, India, the UK and Mexico, found that, although workers express concern over financial security, the vast majority of individuals- regardless of nationality - take a short-term approach to financial planning.

However, the study shows a strong appetite on the part of employees for improved financial planning and education – and the global insurance group is urging employers to give greater emphasis to providing employee benefits, including programmes like financial planning, as a strategic investment in the long-term success of their business. Research shows 68% of Indian companies offering employee benefits see an increase in productivity.

"Even as economies worldwide recover from the great financial crisis and get back on a growth track, our multinational research shows that employees in both developed and emerging markets are deeply concerned about their short- and long-term financial well-being and security," said William J Toppeta, MetLife’s President, International.

"Our 2011 study also substantiates a worrisome trend regarding the disparity between increasing longevity in most countries and a widespread lack of preparation in both developed and emerging markets to fund what in many cases could be more than two full decades of retirement."

Further key trends identified across the countries covered by the report include:

Inconsistent use of Employee Benefits: UK employees fail to take full advantage of benefits with only 28% taking up private medical insurance despite 72% of employers making it available. While most UK employees own most of their products outside of their workplace, younger employees own a higher proportion through their company. Elsewhere, nearly a third of Brazilian employees chose not to sign up for benefits offered in the workplace while Mexican workers, despite an interest, experience widely variant benefits packages subject to their location.

Short-term financial insecurity: Despite nearly half of Brazilian workers looking no further than their next paycheck and only 40% of UK workers and Australian workers assessing their income protection needs, sudden loss of income still ranks in the top three of employee financial concerns in all five nations.

Longer retirements but retirement savings lag: Workers across all countries surveyed were worried about living on retirement money yet 75% of Australian and 55% of UK workers admitted to falling behind on their retirement goals. Meanwhile, of those surveyed, only 30% in Brazil, 25% in Mexico and 15% in India had taken steps to plan for their old age.

The 2011 study is a follow-up to MetLife's first international survey released in 2007. The new study adds Brazil to the original group of four countries and builds on lessons learned in its annual study of US trends since 2001. Where possible, comparisons have been made with the US study results.

"Whether you are a multinational firm operating in numerous countries or a large local company, your greatest resource and competitive differentiator are your people. Our research shows that providing the right mix of benefits helps to increase loyalty and job satisfaction and achieve top enterprise objectives," said Eugene Marks, Executive VP at MetLife.

"Companies should think globally and act locally, especially with the growing complexity of retirement, financial, and health and wellness programmes that are available today," concluded Marks.

MetLife UK: www.metlife.co.uk

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