Employee benefits are among the most significant investments a company makes in its workforce—but are they truly benefiting employees, or have they become a generic, tick-box exercise? As South Africa’s economic, legislative, and demographic landscapes evolve, it’s time to critically assess how group risk and retirement fund benefits are structured and communicated. This article explores why employers should move beyond compliance and embrace a proactive, strategic approach to benefits.
Group Risk Benefits: Relevance, Value, and Communication
Group risk benefits—including life cover, disability income protection, critical illness, and funeral benefits—are designed to offer financial security in times of crisis. However, many employers implement employee benefits and then neglect to re-evaluate whether these benefits remain relevant or effective over time.”.
Key reasons for regular review:
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- Cost Efficiency: Group risk premiums can fluctuate annually due to age profiles, claims history, or insurer pricing shifts. Benchmarking costs against the market ensures competitiveness and sustainability.
- Structural Alignment: A one-size-fits-all structure may not address the needs of a diverse workforce. Younger employees may prioritise income protection, while those with families value life cover. Tailoring benefits by age, income level, or role enhances relevance.
- Benefit Adequacy: Are the insured amounts aligned with inflation, rising healthcare costs, and legislative shifts? Benefits must evolve to remain meaningful, especially in light of reforms such as the Two-Pot Retirement System.
Education and Understanding: A benefit loses value if employees don’t understand it. Regular communication, individual benefit statements, and workshops ensure employees appreciate and use their cover effectively. Employers should ask: “Would my staff know what to do if they needed to claim?”
A well-designed and well-communicated group risk offering provides reassurance, reduces absenteeism during personal crises, and builds goodwill across the organisation.
Retirement Funds: Are You Maximising Long-Term Financial Wellness?
Retirement funds remain the cornerstone of employee financial wellbeing. However, many members are unaware of the variables that shape their retirement outcomes. Employers can add significant value by facilitating periodic reviews of retirement fund structures and member choices.
Three fundamental pillars require attention:
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- Asset Management Fees and Total Investment Costs: Even small differences in fees compound significantly over decades. Employers should ensure default portfolios are low-cost and negotiate institutional pricing where possible.
- Administration Fees: Transparent admin costs are essential. Some platforms embed multiple fee layers, reducing the member’s net return. A clean, simplified fee structure builds trust.
- Investment Performance: Over the long term, investment performance makes the biggest difference. Moderately aggressive portfolios—typically comprising 70–75% equities—have consistently outperformed conservative or smoothed bonus funds. While volatility is a natural part of markets, long-term exposure to equities has proven to deliver superior inflation-beating returns.
Employees who invest in higher-equity portfolios early in their careers benefit from compounding market growth. Employers and advisors must help members understand this long-term view, especially in emotionally charged market cycles.
Contribution Strategy: Unlocking the Power of Compounding
One of the most powerful, yet underutilised, levers in retirement planning is increasing contribution levels. Even a 1–2% increase in contributions—particularly aligned with annual salary reviews—can drastically improve retirement outcomes due to the exponential effect of compound growth.
Employers can encourage positive behaviour by:
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- Setting default escalation options (e.g., automatic 1% annual increase).
- Educating employees with projections that illustrate the impact of increased saving.
- Offering voluntary top-up channels through payroll.
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In addition, financial wellness sessions should shift from abstract jargon to personal relevance: “How much will you need to retire comfortably?” and “What can you do today to get closer to that goal?”
Final Thoughts: Strategy Over Simplicity
Too often, employee benefits are implemented with minimal engagement beyond setup. But benefits are not static—they should evolve with your workforce, your business goals, and the national context. Reviewing group risk and retirement fund arrangements is not merely a compliance obligation; it’s an opportunity to align your benefits offering with the genuine needs of your employees.
Are your benefits protecting your people—or just ticking a box?
By treating employee benefits as strategic tools rather than plug-and-play solutions, employers can build stronger loyalty, improve employee wellbeing, and enhance organisational resilience. In today’s competitive talent landscape, that’s not just good policy—it’s good business.
About The People Company
At The People Company, we’re not just employee benefits intermediaries—we’re strategic partners committed to ensuring that your benefit offerings are relevant, optimal, and meaningful. We don’t believe in cookie-cutter solutions. Instead, we take the time to understand your workforce, your business objectives, and your long-term goals.
Whether it’s designing tailored group risk structures, reviewing investment portfolios, or helping employees understand their benefits, we focus on the human element. Because for us, it’s personal. After all, our name says it all: The People Company. People matter, and we make sure your benefits prove it.
Let’s move beyond plug-and-play. Let’s build benefits that work—for your business, and for your people.
Maurice-Johan Pieterse
Employee Benefits – Snr Consultant