According to a new poll, over 78% of businesses in the GCC aim to establish financial well-being plans for employees over the next two years to assist them bridge their retirement savings gap.
According to a survey conducted by global advisory firm Willis Towers Watson, 48% of organizations intend to implement financial well-being strategies that are effectively communicated to employees, while 30% are considering personalised engagement with workers to support their savings needs for key life milestones.
In November of last year, the business questioned 31 companies in the GCC, of which 60% have fewer than 1,000 employees, 27% have between 1,000 and 4,999 employees, and 13% have more than 5,000 employees.
“Employers are rapidly discovering that money issues are a major source of worry and may have a significant influence on general wellbeing among their staff,” said Steve Clements, WTW’s Middle East head of integrated and global solutions.
“Employers want to solve this issue, especially because the labor market is increasingly competitive, and they want to retain their employees while also attracting new hires.” As a result, there is a greater emphasis on financial well-being as part of a holistic approach.
According to a 2020 Mercer poll, 45 percent of international employees either have no means to maintain a respectable standard of life in retirement or plan to work past retirement age to supplement their income. Respondents also reported a lack of financial literacy, with 61% claiming they had no long-term savings.
The Covid-19 epidemic has pushed employee financial difficulties to the forefront, and many businesses are now attempting to devise strategies to assist employees in closing the savings gap.
According to WTW, the most difficult financial burden for employees is saving for retirement, followed by childcare and education expenditures, saving for other obligations such as housing, day-to-day costs, and emergency savings.
According to the research, eight in ten GCC businesses aim to increase retirement saving help for employees over the next two years, 65 percent plan to support childcare and education expenditures, and 50 percent plan to increase support for emergency savings.
“While wages in the UAE are largely tax-free, many individuals struggle to make appropriate arrangements for short-term savings or longer-term financial planning for retirement since they frequently discover they do not have access to a pension,” Mr Clements added.
“More can be done in the workplace to provide assistance and advise. Many employees want their employers to be more engaged in this arena and to provide effective solutions.”
When it introduced the DIFC Employee Workplace Savings (Dews) plan in February 2020, the Dubai International Finance Centre was the first body in the UAE to overhaul the gratuity system – a defined end-of-service benefit that all foreign employees are entitled to after completing at least one year of service.
Employers in the free zone are expected to donate a monthly sum ranging from 5.83 percent to 8.33 percent of an employee’s income, depending on length of service, to a trust-managed fund.
According to the WTW survey, approximately nine in ten employees would value organizations taking a more active role in supporting their financial well-being, while 43% believe their companies have a clear understanding of the financial issues employees face, and another 43% believe Covid-19 has had a negative impact on workers’ financial well-being.
Sixty-one percent of businesses plan to hold financial education seminars in the next two years, while 43 percent are contemplating giving financial advice to staff, according to WTW.
According to the report, half of all businesses surveyed aim to give applications to aid employees with budgeting and spending over the next two years, and 48% are contemplating giving financial well-being self-assessment tools.
Meanwhile, the WTW survey revealed that 69% of high-income employees in the region would trust financial well-being tools offered by their company, whereas just 53% of low-income employees did.
Employers are likewise striving to improve the savings and protection choices they provide to their employees. According to the poll, around 36% currently give improved end-of-service benefits in excess of local statutory requirements, 32% have a corporate share ownership plan, and 21% have alternative workplace saving programs such as general savings or investment accounts.