Size, says Margrit Schmid, is not the only criterion for success. But it does help indicate just how well a company is doing in its chosen marketplace. “In terms of premium volume, we are the leading global employee benefits network,” she says. “While size is not everything, our size does reflect how many multinational companies entrust their employee benefit solutions to us.”
Clients looking for answers to their employee benefit problems do not come to Swiss Life Network just because it is big, of course. Among the important pillars for Swiss Life Network’s success, Schmid says, are its totally customer-oriented and experienced multilingual employee benefit experts, and its modular system of solutions, which allows companies to determine the best plan to match their needs and risk appetite. “We offer best-in-class employee benefit solutions, which also include administration,” she says. “Our solutions include managing pension funds for multinational companies and providing large companies with captive solutions. Every client has a single point of contact within our organisation, which coordinates and organises all their benefit needs around the globe. Naturally, this is in close co-operation with our local network partners, each of which is a leading life and pension provider in their market. In every case, optimal and efficient administration is part of our solution.”
This network of local partners is an essential part of Swiss Life’s ability to offer companies global employee benefit schemes. “We work closely with our local partners who, like us, use state-of-the-art technological support to ensure the highest quality service,” Schmid says.
In a world where state medical provision, state pensions, and state benefits vary so greatly between countries, inevitably national differences affect benefit plans across borders among an international corporation’s workforce, an issue that particularly affects expatriate workers. Companies need to ensure that they are fair to both expatriates and the local employees they work with. Here, Swiss Life Network can help. “Even within the EU we have 25 different social and labour laws,” Schmid says. “We base our solutions on best-in-class local solutions that are fully compliant with local laws, and attractive and competitive in the local environment. We then group these into a global solution that provides corporate headquarters with transparency and information. This includes regular reporting, and allows cost optimisation of risk coverages through multinational pooling.”
On the global level, a degree of equality in employee benefits across countries can still be achieved. However, this is through providing employees worldwide with the same categories of benefits, and not necessarily with the same level of benefits.
“Adequate solutions for expatriates are a special challenge. It is important for expats to ensure they have a solution that bridges any gaps resulting from working in different locations and not always qualifying for local solutions or vesting rights. Our expat solutions provide both risk cover and pension solutions, and help ensure that expats have decent risk and retirement benefits both during and after retirement, comparable to an employee with a similar career pattern, but always in the same country. In some cases, this can mean that in some countries an expat may receive more from the employer in terms of benefit contributions than a pure local employee, since social security and other state provisions must be considered differently.”
There is room in the system for expat workers to help themselves, however. “It is important that expats ensure they have a solution to cover any gaps resulting from working in different locations and not always qualifying for local solutions or vesting rights. As we work with modular solutions, we can ensure that every time an expat changes from one country to another, the modules – risk, health and savings – can be adjusted to the new environment,” she says.
All the same, the existence of, for example, “fringe benefit” taxes in certain jurisdictions, for example Australia, and the tax applied to benefits in countries such as the UK, mean efforts at complete equality are unlikely to succeed. “Given the different systems of social and labour law, as well as tax law and general living conditions, it is unrealistic to aim at absolutely equal treatment for employees across borders,” Schmid says. “What can be aimed at is comparable treatment taking into account the environment.”
“Legislation within the EU has ensured that there are no penalties if you move between countries, even if in the first country benefit contributions are tax efficient, that is, tax deductible, while in the second benefits are tax efficient. Tax optimisation is always a complex area. We provide transparency and information, but detailed tax planning has to be in the hands of the employer or the employees themselves.”
It is not always obvious from a Eurocentric viewpoint, but cultural differences – such as the expectation in South Asian countries and elsewhere that children will take care of their parents in old age – make a difference to the employee benefit solutions workers expect, something that Swiss Life Network has to tailor in. One problem, however, is that what parents expect today is not necessarily what children will want to be doing when they grow up, and pension provision and saving for old age, while far less important still in many cultures than they are in the West, are likely to move rapidly up the agenda in developing countries. “As we group best-in-class local solutions into one global solution, local customs are automatically considered in our plans,” Schmid says. “But we are certainly experiencing significant changes worldwide in relation to the expectation that children will take care of their parents and act as their pension solution. While the expectation is still there, ongoing globalisation and urbanisation, as well as the demographic revolution, are making it clear that this expectation cannot be met.
“Every individual needs a pension solution independent of their family and the next generation. In the West also, social security systems based on the so-called inter-generation contract [the expectation that today’s workers pay the taxes that cover the pensions of yesterday’s workers] are experiencing strong financial pressures.”
There does not seem to be a lot of evidence that, outside the obvious areas of differences in local health care provision and old age provision, employees around the world see benefits differently in different jurisdictions. “The importance of employee benefit solutions for employees depends on the level and extent of social security, the tax incentives available in relation to employee benefits, and last but not least, the economic environment and degree of development of the economy,” Schmid agrees. “People generally care most about daily needs and consumption, and only then look at protection against the financial consequences of death, disability and old age.”
“In the current environment, however, we are seeing increased awareness of the issues and more interest in employee benefits and old age pensions. We listen very carefully to our customers across the globe, and constantly adjust our solutions to meet their needs. We also take an active part in discussions shaping the employee benefit industry.”
All the same, whether employees and employers prefer benefits in terms of rewards and incentives, for example extra holiday allowances for longer service, bonuses for good service, or they prefer basic “inalienable” benefits, such as pensions, medical cover, and so on, “depends on the country and its economic situation,” Schmid says. This is another challenge for global employers: discovering whether the people who work for them in a particular jurisdiction would like more cash or holidays, or whether they look for employee benefits covering death and disability, and a decent income after retirement. “From an employer standpoint, there is also the question of social responsibility,” Schmid says. “Firms need to make sure that employees are aware of the pension situation, and can participate in a second pillar pension scheme.”
Employers also need to look to the future, when the world comes out of the current recession, and skilled, committed workers start to get scarce again as employment picks up. “Employee benefit solutions are an important tool to attract and retain talented employees, and studies show that these can also have a direct positive impact on company performance,” Schmid says. For these reasons, “employers have a real interest in providing appropriate employee benefit solutions, and not just cash or longer holidays.”
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