Sixty-four percent of Ghanaians are financially stressed, according to the 2023 Old Mutual Financial Services Monitor. Inflation, debt, and unemployment contribute to this stress.
Employers are increasingly concerned about their employees' financial health and are finding more ways to demonstrate their support. By providing proven avenues for savings, investments and insurance, you can build a strong safety net that benefits both your company and its employees.
Optimizing retirement plans
Six out of ten Ghanaians are not saving for retirement. Only 20% consider saving for a comfortable retirement a key savings goal, and just 7% have a retirement annuity. Due to these low long-term savings rates, seven out of ten Ghanaians hope their children will support them in old age, placing a significant financial burden on future generations.
Pensions and provident funds that focus on secure, low-risk investment options protect your employees' financial futures, even during economic downturns. This encourages savings and provides a structured way to build a retirement nest egg.
Professional management of retirement funds brings in experienced financial managers who use their market expertise to make informed investment decisions. These managers have access to a wide range of investment products and resources, including exclusive opportunities and institutional research. Their decisions are based on rigorous analysis, minimizing emotional biases that can negatively impact performance.
They are experts at creating customized investment strategies based on the specific needs of retirement plan participants, considering factors like age, risk tolerance, and retirement timelines.
Active management ensures constant monitoring and adjustment of portfolios in response to market conditions and economic trends. Diversifying investments across various asset classes such as stocks, bonds, and real estate helps lower risk and improve returns. Regular portfolio reviews ensure alignment with investment goals, compliance with regulations, and provide detailed performance reports.
Professional management significantly enhances the value and effectiveness of the retirement benefits you offer, giving employees greater security and confidence in their financial future.
Comprehensive insurance coverage.
Insurance manages risk and provides financial security. Offering comprehensive group insurance policies address various aspects of an employee’s life and health needs. Group life insurance covers both natural and accidental death, providing significant financial support to an employee's family in the event of their untimely death.
Health insurance is equally important. Although health insurance is reported as the main employee benefit, only 28% of employees receive it according to the Old Mutual Financial Services Monitor. This leaves a significant number of employees vulnerable to financial strain in the event of a medical emergency.
In addition, more than half have taken out loans for unexpected expenses, with medical and health-related costs being the most common. This highlights the vulnerability of Ghanaians to medical emergencies, which in turn leads to debt management challenges.
Comprehensive health coverage protects employees from high medical costs and gives them access to necessary treatments, reducing their financial burden and helping them stay healthy and productive.
Disability insurance, both permanent and temporary, is essential for financial stability during recovery periods. If an employee cannot work due to injury or illness, disability insurance provides income replacement, helping them manage their finances while they recover.
Critical illness insurance offers additional protection by providing financial support if an employee is diagnosed with a serious health condition like a heart attack, cancer, or stroke. This allows employees to focus on their recovery without worrying about money.
Forward-thinking employers are increasingly enhancing employee welfare by offering additional benefits such as wellness programs. Free annual health checkups, fitness sessions, and wellness workshops can improve employees’ physical and mental health. Monthly newsletters with financial tips and insights can help them stay informed and make better financial decisions.
Encouraging personal savings
One-third (33%) of Ghanaians are prioritizing emergency savings, making it the fifth most common savings goal. Given the importance of emergency savings, employers can play a significant role in helping employees build up their emergency funds.
Encouraging personal savings is one of the most effective ways employers can support employees. Setting up automatic payroll deductions for savings accounts is a simple solution. When savings become an automatic part of an employee’s routine, it helps them build an emergency fund, which can be a lifesaver during tough times.
Financial education workshops teach employees the importance of saving and how to manage their finances. Only a small percentage of working Ghanaians (28%) are currently receiving financial education from their employers. From basic budgeting to advanced investment strategies, financial literacy equips employees to handle financial challenges better. The return for the employer is improved productivity and morale.
While employees bear ultimate responsibility for funding their financial future, employers can significantly improve retirement plans by actively supporting them. Providing matching contributions, educational programs and a strong investment lineup makes these plans more effective. Given the financial stressors facing our country, all employers should address this head-on.