This article was written by Ralph Benson, Co-Founder & Head of Financial Advice at Moneycube.
It’s no secret that competition for high-performing people is pretty stiff in the Irish market. But in a rapid growth scenario, there’s not much time to devise a comprehensive benefits plan. The approach needs to be simple and smart. Here are five things we’ve learnt advising small and medium enterprises on their workplace benefits.
1. Free bagels aren't everything
It’s tempting to do the bare minimum when it comes to company pensions. For new businesses, that often means offering staff access to an off-the-shelf PRSA. Nothing wrong with that – except you and your team are missing out on a big opportunity to save tax, plan for the long term, and incentivise your people.
What’s more, it weakens your position when employees compare your offering to larger, or longer-established organisations. We often find businesses put as much time into their free lunch policy as they do into their company pension policy. But experienced people want real benefits – even in a startup scenario. They see value in a well-thought-out offering. And the cornerstone of workplace benefits is the pension.
2. Pensions are the best show in town
If I hear one more person talk about the “pensions time bomb”, I might explode myself. In fact, there’s a massive pensions opportunity, for startups and well-established businesses alike.
Firstly, pensions are the best tax incentive there is. Employees who pay 40% tax see €100 land in their account for every €60 of net pay they contribute. That’s a 67% growth rate off the bat. On top of that, the money grows tax-free, and when they retire, they can trouser a quarter of it… also tax free. For companies, pension contributions also receive relief from corporation tax. People in Ireland still talk fondly of the SSIA scheme twenty years ago – but it was nothing compared to this opportunity.
3. You can probably improve your existing arrangements... At no cost to your business
When we review a company’s benefits arrangements, there’s always room for improvement. Pensions have moved on in the last few years. They’re more flexible, cheaper and more transparent. And crucially, the company doesn’t have to get too involved in day-to-day running.
Moneycube can run a slide rule over your company pension. We can help you reduce or remove costs to the company, drive down charges to the employees, enhance benefits, reduce admin, and improve customer service. That’s why it’s almost always worth reviewing your company pension provision every few years, especially in a fast-growth situation.
4. It's easier and more beneficial than you think to setup a company pension scheme
A lot of employers steer clear of a company pension scheme. They fear that because it has the company’s name on it, it will bring a bunch of admin and responsibilities.
In fact, a company scheme makes a lot of things easier. You’ll be able to offer seriously good options to company directors and leaders to build their pension provision, for example. You’ll simplify payroll, and get a single view of your situation as well. And the pension provider – along with an advisor like Moneycube – will lead the charge in arranging trustees, onboarding, and employee engagement. If you’re a start-up with more than a handful of employees, or are planning to expand your team, now’s the time to consider a company pension scheme.
5. You can layer on other benefits at the same time
As your business grows, you’ll want to evolve a package that attracts and retains staff. The big financial benefits you can offer are income protection (protecting staff if they were to become sick over the long-term) and death in service benefit (which pays a multiple of salary if you are employed by a company at the time of death). It’s also possible to add on other bells and whistles like medical support and employee financial advice. If you’re a new or rapidly growing business you’ll likely find these are surprisingly low-cost benefits to offer your team. Bolting these benefits together with an attractive pension offering is a real differentiator when competing for talent.
Talk to Moneycube today about how you can improve your staff pension and benefits package.
Written by Ralph Benson, Co-Founder & Head of Financial Advice at Moneycube
Moneycube.ie is a leading Irish provider of investment and pension advice to individuals and companies.