Bundled or unbundled?
By Carla Seely
When a new business starts up on the island, one of the many items on the ever-increasing checklist is the topic of employee benefits. Understanding what is required by law, what is considered an added benefit, or deciding between using a single provider or splitting between different ones, is all part of the research. The benefits an employer provides to its employees will have a big impact on employee retention, so understanding your corporate responsibility and the industry standard is essential.
As Richard Branson, founder of the Virgin Group, once declared: “Take care of your employees, and they will take care of your business”. As an employer, you’ll discover one of the largest expenses is health insurance for employees, not just in Bermuda: health insurance costs are challenging globally. An employer’s responsibility is to ensure employees have good-quality insurance that meets the needs of its workforce. However, providing health insurance is only one element; a company should also implement wellness programmes. Investing in a workplace wellness programme can improve the company brand, build loyalty with its employees and reduce sick time.
Effective as of January 1, 2000, a mandatory pension scheme was established in Bermuda, requiring companies based in Bermuda, or wishing to set up in Bermuda, to create a company pension plan for their employees (Bermudians and spouses of Bermudians). There have been amendments to the Pension Act over the past eighteen years, the same binding principle still exists –– providing retirement benefits. Most employers now offer a pension plan to all employees regardless of their status, which shows employers recognise the value in helping their employees towards their retirement goals.
Life and disability insurance, although not a mandatory benefit, is something that is typically offered by most employers. However, it is important to note that since life and disability insurance is not mandatory, there will be eligibility requirements –– some of which the benefit provider will set and some of which the employer can request.
Once you have decided on the type of benefits you wish to offer your employees, the next decision is whether you bundle the benefits (use one provider for all) or unbundle the benefits (use the best provider for each type of benefit).
A great way to figure out what your workforce is looking for is to hold a “town hall meeting”, where you find out what is important to them, i.e. essentially which products and services they are looking for in today’s environment. Once you have the information from your staff, it is time to tender a request for proposal (RFP) for all your employee benefits, and we normally recommend doing this every few years. Once the RFPs come back, sift through the information and determine what options are available. Perhaps you will stay put, but perhaps you will discover a much better offer for each benefit.
Changing benefit providers is not as painful as you may think. Yes, it generates paperwork, but benefit providers are experienced with the process, which is streamlined and well regulated.
At the end of the day a happy employee is a productive employee, which is what any employer wants.
Carla Seely is the Vice President of Pension and Investments at FM Group.
This article was originally published in the September 2018 edition of the RG Business Magazine.