GCC companies to develop financial well-being plans for employees

About 80% of businesses plan to provide greater assistance over the next two years to help workers budget and increase retirement savings, survey finds

Fifty-seven per cent of employers in the GCC say they offer some financial wellbeing programme but have not formally articulated a strategy. Alamy

About 78 per cent of employers in the GCC are planning to develop financial well-being strategies for employees over the next two years to help them bridge their retirement savings gap, according to a new survey.

Forty-eight per cent of organisations plan to introduce financial well-being strategies that are effectively communicated to employees, while 30 per cent are considering personalised engagement with workers to support their savings needs for key life milestones, according to the survey by global advisory company Willis Towers Watson.

The company polled 31 companies in the GCC in November last year, of which 60 per cent have fewer than 1,000 employees, 27 per cent employ between 1,000 and 4,999 workers and 13 per cent have more than 5,000 staff on their payroll.

"Employers are increasingly finding that worries about money are a major cause of anxiety and can have a big impact on overall wellness among their workforce," said Steve Clements, head of integrated and global solutions in the Middle East for WTW.

"Employers want to address this issue especially given that the labour market is highly competitive and they want to keep their staff and attract new joiners. Hence, there is an increased focus on financial well-being as part of a holistic approach to maintaining a healthy and motivated workforce."

A 2020 survey by Mercer found that 45 per cent of foreign employees either had no means to maintain a decent standard of living in their retirement, or plan to work beyond retirement age to derive enough income. A lack of financial awareness was also an issue among respondents, with 61 per cent saying they had no long-term savings.

The Covid-19 pandemic has brought employee financial issues into the spotlight and many companies are now trying to formulate plans to help workers bridge their savings gap.

Retirement savings emerged as the biggest financial challenge faced by employees, followed by childcare and education expenses, saving for other commitments such as housing, day-to-day costs and emergency savings, according to WTW.

Eight in 10 GCC employers said their organisation would provide greater retirement saving assistance to employees over the next two years, 65 per cent plan to support childcare and education expenses and 50 per cent cited enhanced support for emergency savings, the poll found.

"Although earnings in the UAE are generally tax-free, many people struggle to make adequate provisions for short-term savings or longer-term financial planning for retirement as they often find they have no access to a pension," Mr Clements said.

"More can be done to offer support and advice through the workplace. Many employees are looking to their employers to be more active in this space and they trust them to bring good solutions."

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 – when it introduced the DIFC Employee Workplace Savings (Dews) plan in February 2020.

Employers in the free zone are required to contribute an amount that is between 5.83 per cent and 8.33 per cent of an employee’s wage, depending on their length of service, on a monthly basis to a fund administered by a trust. Employees can also choose to make additional voluntary contributions to the Dews plan.

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About nine in 10 respondents to the WTW survey said employees would value organisations taking a more active role in supporting their financial well-being while 43 per cent believe their companies have a clear understanding of the financial issues employees face and another 43 per cent said Covid-19 has had a negative effect on workers’ financial well-being.

Sixty-one per cent of companies plan to organise financial education seminars in the next two years while 43 per cent are considering offering financial guidance to employees, WTW said.

Half of all employers surveyed also plan to provide apps in the next two years to help employees with budgeting and spending, while 48 per cent are considering offering financial well-being self-assessment tools, the survey found.

Meanwhile, the WTW report found that 69 per cent of high-income employees in the region would trust financial well-being tools provided by their employer, while only 53 per cent in the low-income group displayed a similar sentiment.

Employers are also looking to enhance the savings options and protection benefits they offer employees. About 36 per cent said they already offer enhanced end-of-service benefits in excess of the local regulatory requirements, 32 per cent have a corporate share ownership plan, while 21 per cent provide other workplace saving plans such as general savings or investment accounts, according to the survey.