Saving is a key priority for both young and old. Employees below the age of 40 tend to save for their retirement, ferreting away for a nest egg early in their career, even as their older counterparts in office tend to concentrate on the retirement plans of the employer.

Retirement plans at corporates has emerged as the top source of income for many employees. Minimal social security and inadequate awareness about suitable retirement savings options have resulted in employees becoming over-dependent on the retirement plans provided by employers, according to a new study by professional services company, Towers Watson.

``Most employees today want to retire early, and recognise the need to save more, irrespective of their age group. Our research has shown that the employer retirement plan is the most important method for saving for retirement, and is a key retention tool for most employees,'' said Anuradha Sriram, Director-Benefits, Towers Watson, India.

In an interaction with Business Line about the survey, Sriram said, ``Employees across the board tend to prefer guaranteed retirement benefits, since few employees have confidence in affording long spells in retirement, especially with increasing longevity and high inflation.''

The study noted that Indian employees are heavily dependent on their employers for post-retirement income, and that retirement benefits have emerged as an important retention driver at firms, and the numero uno option across all age groups.

Employees who are members of a retirement plan at their company, tend to believe that their most important income source during retirement would be their employer's retirement plan, followed by savings and investments and buying property.

``For employees above 40s, the retirement plan at their company is the most important method of saving for retirement. Our research also shows that when retirement plans meet employee needs, they provide a higher incentive to stay on with the current employer,'' she said.

The trend is accentuated amongst employees approaching retirement, with 78 per cent of those with a retirement plan surveyed stating that their retirement plan was the primary way they would save for retirement, compared to 68 per cent of those under forty.

Global field

It is not always higher pay and perks that drive workers. Given a choice between a better retirement provision and a larger base pay, employees have begun opting for generous and guaranteed retirement benefits. However, when given an independent choice between the various components of rewards, Indian employees tend to prefer a larger base pay hike across all age groups.

This contradiction, said Sriram, signalled a visible need for employers to enhance retirement education, and help employees understand the value of retirement benefits.

As the war for talent intensifies across industries, progressive employers would do well to re-examine the total rewards mix and leverage the benefits as a differentiator, she added.

As for corporates aiming to retain younger staff and cut down on attrition, Sriram said, ``Employers should ideally examine the total rewards mix, to align with the strong desire for generous benefits and guarantees. They (employers) need to provide tools for employees to plan for their retirement, and help them to save more and manage their financial risks. They should also provide flexibility in the benefits they offer, to cater to the diverse needs of their workforce.''

The survey was undertaken across 12 countries, with the participation of 22,347 employees working for large, non-government employers. The results showed that emerging economies like India and China tend to enjoy a higher savings culture, as compared to their western counterparts like the US and UK.

From India, there were 2,006 employee responses, of which 1,669 employees are members of a retirement savings plan. The Indian workers surveyed had an average age of 34 years, and a female population of 40 per cent. All the Indian respondents are employed at large, non-government establishments, and represent all job levels and major industry sectors.

With a majority of Indian employees expecting to retire around 60, despite a high savings rate, a large number are not confident of affording a long spell of retirement.

``Our research showed that for employees below 40 years of age, the retirement plan at the company is again the most important method for saving, after investing in property,'' said Sriram.

The global study aimed at examining employees’ preferences for financial security, and how they have been reshaped in recent years. The countries surveyed account for over 60 per cent of global GDP, and over 80 per cent of global retirement plan assets.

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