The retirement benefit

The Retirement Benefit: An Important Factor for Employees

The retirement benefit is one of the most important factors for employees when they are provided with job opportunities. This top priority indicates people’s concerns about their ability to finance their future lives after reaching retirement age. According to Mercer (2016), retirement benefit savings are often made up of contributions from both the employee and the employer at varied percentages of the employee’s pay. In the majority of countries around the world, the respective governments regulate retirement benefits as an obligatory feature.

Retirement Benefits in Mexico

Mexico, India, and Australia were among the countries whose retirement benefits were examined. The Mexican employees save for retirement under a mandatory system in which the employers submit 2% of the employee’s salary (MetLife, 2007).

Retirement Benefits in India

Indian employees enjoy the retirement benefit through the government-driven Gratuity program where the employers are required to pay the employees upon departure from the organizations (MetLife, 2007). After offering service to an organization for at least five years, the Indian employee is entitled to a half month’s salary per year of service upon the departure. Indian employees have the option of saving for retirement through the Public Provident Fund that is subjected to favorable tax.

Retirement Benefits in Australia

Australian employees save for their retirement under a government-controlled program called Superannuation in which companies submit 9% of the employee’s salary (MetLife, 2007). Most of the organizations in Mexico offer the defined benefit pension or hybrid while the Indian and Australian companies offer defined contribution pension (International Benefits Network, 2017).

The Impact of Government-Regulated Retirement Benefits

The least surprising aspect of the retirement benefits in countries reviewed is that the respective governments drive the different saving programs. The surprising element is that the Australian employees have such a high confidence in the government-regulated retirement benefit contribution that they fail to plan for additional retirement saving. The impact of this phenomenon will be adverse in the future when a large group of retired people dependent on the government pension strains the government expenditure. The Australian government should encourage their citizens to seek private retirement benefits schemes to avoid such a scenario. Though the Indian employees receive retirement benefits through the Gratuity program, the absence of saving for retirement through a mandatory contribution scheme is surprising. The Indian government should consider the establishment of a contribution program to cushion its citizens against financial struggles after retirement.

Diversified Priorities and Lack of Future Financial Planning Awareness

The practices differ in each country due to the diversified priorities among the citizens as well as the apparent lack of future financial planning awareness. The retirement benefit is absent among the top three benefits offered to the Indian employees, which portrays its less significance among the Indian people. High dependency on the government retirement benefits program by a majority of Australian citizens shows their lack of information regarding better future financial planning. The mandatory Mexican government’s programs on retirement saving reflect the benefit’s importance to the citizens.

Compensation Strategy and Financial Planning Initiatives

The compensation strategy in Mexico after opening a facility in the country would follow guidelines from the statutory requirements of the Mexican government. Though government programs on saving for the future exist in India and Australia, I would be concerned with personal saving initiatives for my employees. Therefore, hiring locals in the two countries would necessitate the institution of financial planning workshops to aid the employees in their future financial planning. Through such seminars, employees get empowerment for future financial stability and in return enhance their loyalty to the company. This mutual benefit shall increase the probability of the facility’s success.

References

International Benefits Network (2017). Employee Benefits Overview. Retrieved from http://www.internationalbenefits.net/employee-benefits-overview/

Mercer (2016). Worldwide Benefit & Employment Guidelines. Retrieved from http://www.imercer.com/Uploads/common/pdfs/2016_wbeg_sample.pdf

MetLife (2007). Study of International Employee Benefits Trends. Retrieved from http://www.whymetlife.com/international/downloads/iEBTS.pdf