Why the off-boarding stage is the critical final chapter of the employee benefits journey
An employer’s responsibility to a departing employee does not necessarily end the day the individual leaves the business. Whether the exit is due to retirement, a career change, or redundancy, employees appreciate support from their former employer. It is a milestone event in their lives and how it is handled by the employer is likely to be remembered for many years.
As an organisation, it is the company’s final chance to enhance its reputation as a responsible employer. If treated well, the employee would leave with a pleasant feeling that they are likely to share with others in the industry – in person or on websites such as GlassDoor.com.
In its most basic form, off-boarding involves notifying the departing worker that their employee benefits are about to end and sign posting them to options where they can source their own equivalent arrangements should they wish to continue them in a personal capacity.
The employer needs to set a date for the benefits to end and inform the employee. While this may seem an obvious point, many employers neglect this critical step. A responsible employer will make this date crystal clear.
This date can be of critical importance to the employee, for example to ensure unbroken private medical insurance cover. This is especially the case if the employee, or covered relatives, have pre-existing medical conditions or a medical procedure planned for the near future. The insurer may well require an employee to incept their personal policy within a short window, perhaps as little as a month after their employment officially ends, if they need or want to protect cover for pre-existing conditions.
It is important to bear in mind that the employee, having enjoyed employment-based medical insurance, is unlikely to have previously purchased medical insurance privately, at least not in the recent past. The market can be very difficult to navigate, so timely expert guidance can be very useful. The employer could help them understand what happens to their cover when they leave the business and provide access to the company’s insurance broker, which can then help them secure alternative cover.
Beyond the important administrative tasks, employers should always remember that leaving a company after a long period, especially when entering retirement, is a lifechanging moment. There are psychological aspects to consider alongside the practical, so it is important to support a smooth transition into the next stage of their life.
The transition could be assisted in many ways; the appropriate approach will depend on the individual’s circumstances and preferences. Some may benefit from a gentle wind-down of responsibilities and working hours, while others may prefer a greater level of educational retirement planning services that enable them to plan and make the most of emerging financial and non-financial opportunities.
There will, of course, be many important practical considerations and decisions to make for retirees. Most pressingly, the pension scheme will require attention. For example, would the employee prefer to take a tax-free lump sum or receive a larger ongoing income? Such decisions will require a holistic approach to assessing total assets and lifestyle expectations.
Responsible employers can choose to offer three main types of retirement services:
Pre-Retirement Planning: As employees gradually approach retirement, they are likely to benefit from services that make them aware of all the decisions they will need to make, as well as the range of options open to them. These services are usually provided in face-to-face, or increasingly online, workshops that focus on education and support, covering both financial and non-financial topics. Planning sessions normally begin by encouraging the employees to consider their lifestyle objectives for retirement. Once they have decided their objectives, they can work backwards to build a financial plan that would facilitate meeting those objectives.
Retirement Planning Discussion: Many leading employers offer a telephone-based service to guide employees through the pensions-related decisions they will need to make as they approach retirement. Such services are most effective when offered just before decisions need to be taken.
Independent Financial Advice: Employees with complex financial needs are likely to require the services of an independent financial advisor (IFA), which the employer can opt to facilitate and/or finance. Some employees will need IFA services to develop even a basic plan for their retirement following a retirement planning discussion. In addition to those set to retire, IFA services may be useful to those changing their pattern of work.
At Mercer Marsh Benefits (MMB), we recommend that employers take a two-stage approach to supporting employees through the off-boarding process: evaluate and address. The evaluate stage entails auditing processes to understand how well they support those leaving the company. It means assessing exit communications and ensuring they clearly state key information, such as the date the employee is no longer covered by their employee benefits, as well as directing them towards suitable alternative products and support.
The address stage involves considering how your existing arrangements could be improved. What could the company do to affordably improve the leaving process, helping the business to be remembered as a responsible employer at all stages of an employee’s career?
We recommend working with an employee benefit consultant that understands best practice, across all economic sectors, for supporting employees considering retirement within the next year. It is critical for the consultant to understand the market – across pensions, insurance, and beyond – so they can help ensure there are no gaps in your support policies and ensure the options are competitively priced. The consultant also needs to understand your business, to ensure the off-boarding process is both robust and good value for both parties. A comprehensive and smooth off-boarding process can provide the perfect ending to productive relationships between the employer and its employees.
At MMB, we strongly believe that if you look after your employees, they will look after your business. To see how we can support you with your ‘off-boarding’ processes and policies, please get in touch https://www.mercer.com/en-gb/solutions/health-and-benefits/benefits-broking/private-medical-insurance-for-individuals.