Analysis: MAXWELL PHIRI
WHEN an organisation has a sound pension scheme, synergy is always created with various departments in order to raise the bar of performance which
leads to the organisation’s competitive advantage with similar organisations and ultimately increases positive profits to be posted annually on the organisation’s financials.
One of the advantages of having a pension plan from the employers’ point of view is to motivate the best employees to work for them longer in anticipation of a better retirement package. Employers can use pension plans to motivate their workforce by assuring them of a better retirement.
Pension plans demonstrate the value a company places on the service of its employees and willingness to ensure adequate retirement income for its entire workforce population. The labour market will view the way a company treats its old workers and draw conclusions as to the way other employees who will work for the same organisation will be treated on leaving the company.
Employees who have a good retirement package will proudly speak of their former employers and hence creating a good public image for the organisation.
As much as this may not be a strong point in developing countries, where the labour market is flooded with talents due to dwindling economies, it is still a very valid point. Skilful employees sometimes have more than one job offer and what usually tip the scale are good benefits. A potential employee will pick an employer with good health benefits, a good working culture and great retirement benefits.
A pension plan gives a potential employee confidence in a particular employer. As times change and economies turn round and become robust, employers with best-managed pension plans will retain the best talents while those that have never taken this benefit for their employees seriously will be at the losing end.
When the old folks retire with a well-structured pension scheme they tend to live healthier and longer and in most cases create Small and Medium Entrepreneurs (SMEs), which in turn create employment for the youths in the country. The retirees should have a level of confidence that they can run their own businesses using the expertise they got from the previous employers.
What is so clear is that most of the retirees are good at running shareholders business but not their own. The most desirable situation is to see the retirees use their expertise to develop the youths with a view to knowledge transfer.
According to studies conducted by OECD 2009: Pensions play an important role in poverty alleviation of the elderly – one of the most vulnerable groups in any society, particularly older women. Yet, according to the ILO, only one in five workers is covered by adequate social security schemes, whilst the World Bank says 85 percent of the world’s population over 65 has no retirement benefits at all. In sub-Saharan Africa less than 10 percent of the older population has a contributory pension).
Basically, social protection support can be implemented via public pension arrangements. Indeed social protection is increasingly considered as contributing to the development process in the same way as health and education (van Dullen (2007)). It is beyond the scope of this article to enter the debate over which type of social pension is most appropriate – contributory verses non-contributory/universal etc.
However, irrespective of the type of arrangement, in addition to reducing poverty amongst the elderly, providing pensions has also been shown to have implications for broader society, as benefits are shared with household members – for example via providing food, clothing and school materials for grandchildren.
Indeed, older persons can often act as de facto heads of household, caring for relatives infected with HIV and looking after orphaned children. Around 30 percent of households in sub-Saharan Africa are headed by a person aged 55 and over, with over two-thirds of these households including at least one child under the age of 15 (Help Age International (2006a)).
Over 60 percent of orphaned children in Namibia, South Africa and Zimbabwe, and 50 percent in Botswana, Malawi and Tanzania, live with their grandparents (United Nations (2007)).
Receiving and sharing a pension cements intergeneration relationships and makes the elder more integrated into communities, rather than feeling like a burden on their families.
The author is a seasoned human resources practitioner and pension advisor.