An aging population and the power of communication

Jonathan Kitterhing and Michael Illert were recently asked to attend the 15th annual International Employee Benefits Association (IEBA) conference as the first headhunting firm to present to member delegates of the Association.

Regardless of sector, size or geography, organisations joined to discuss their universal challenges. One of the key issues seemed to be the aging population and how to deliver the truth to their workforce that cost control of benefits spend works against the needs of employees.

There were varying responses across the spectrum of benefit related topics on how to counteract this problem, from communicating the importance of building personal pension contributions to employees through workshops to others who felt that this impact is unavoidable and are therefore taking a harder line with employees. One multinational leader in the medical industry quoted "every company will have to reduce benefit spend, so each member of our business will have to realise this will become a standard adoption for businesses, so it shouldn’t affect retention if our people are bought into our ethos and engaged in our product and working style".

One perspective was introducing low cost global benefits programmes for all employees as a base level of cover, for example, GSK implementing a standard level of immunisation across every location and employee within GSK. Another was implementing detailed bespoke HR Systems which use data to work out cost drivers in each location where particular medical claims vary. For example, in the developed countries ‘lifestyle’ illnesses are increasing costs whereas developing countries costs are driven by infection based illnesses* . Many were entering into captives from the first time, to try to manage and reduce the risk of their various medical policies liability to run at ‘cost neutral’ or an additional investment vehicle, to enable a continued funding of benefits to their staff at today’s levels.

With pensions, perhaps unsurprisingly, the general opinion of the key issues and resolutions varied at different levels across the business. Executives were more concerned about the avenues and routes to avoid lifetime and annual allowances. The wider population of employees, particularly in countries with state run pension plans, rely on the government ‘doing best for the citizens’, or those same demographic thinking ‘it will not be a problem to consider as retirement is years off yet and I need to fund for my needs today’. This group are the majority of the global population and are therefore the greater concern, as they struggle to accept there is an issue for their retirement plan. Equally they are not fully aware of the complications of a rising demographic of non-pension contributors due to early retirement and longer life expectancies but pivotally how this directly affects the value of the state pension fund by the time they retire. For example, by 2030 it is predicted that there will be a 50% increase of state pensioners over the age of 65 in the UK. Maybe even more concerning is that The OECD forecasts for their members that by 2015, there will be more people leaving the workforce than joining it.

A consensus was achieved however, and that was, as is becoming more and more customary with modern reward and people management, that clear and transparent communication is key to establish the buy in of staff to critical challenges that will directly affect their future life planning. The key issue that still remains is that not one of the business leaders felt they had arrived at a way of doing so to begin to really resolve this very immediate future crisis.

*(Source Institute for Health Metrics and Evaluation).