Contributions to employee's future savings: how employees assess it?

“The survey data highlights that residents think of their future and welfare, and they also are aware that they have to seek for alternative additional funds to ensure larger pension after retirement than the 1st and 2nd pension pillar can ensure. Desires of residents can serve as an indication also to employers – by showing initiative and financially supporting the pension savings of own employees, the employer not only facilitates the employee's long-term welfare, but also builds positive employer's reputation, potentially attracting new employees. Also, by providing support, informing and motivating employees to timely take care of financially stable old age, also the general public welfare is raised,” states Atis Krūmiņš, the Head of Luminor Asset Management and Pensions Unit in the Baltics.

“Although such benefits offered by the employer as health insurance or paid phone costs are important, they form already a very usual part of the “basket of benefits” offered by the employer. Therefore, it is essential to find solutions to ensure that the support provided to employees would reach broader, among other things, thinking about the employee's financial welfare in more distant future. Making of the employer's contributions to pension savings can be a successful solution both for the employee, and the employer. Under these dynamic circumstances, a challenge of each employer is to find ways that are attractive for the employee to promote the sense of belonging to the company and positively impact welfare of own employees, in addition showing oneself as a socially responsible company, which takes care of future of own employees,” tells Artis Dekšenieks, the CEO of DHL Express Latvia.

Loyalty towards the company and additional motivation

One third of residents believe that by making contributions to the employee's 3rd pension pillar savings the employer helps to retain the employee's loyalty towards the company. One fifth or 22 % of residents state that it indicates to good financial capabilities of the employer. Residents also hold a view that it is a good opportunity for companies to stand out among other employers, promotes willingness of employees to think about their future, gives an opportunity to use tax reliefs and helps to attract new employees..

One fifth of residents also think that contributions to the pension capital motivate middle-aged and older employees, and the smallest number of respondents or 5 % agree to the statement that such contributions to the pension savings motivate younger people specifically. It can be explained by the fact that, when starting their career, younger residents have not yet started to think about their financial welfare at old age; therefore, they do not consider such employer's initiative as a priority, but it can serve as a good signal for employers to raise this issue, because exactly the decisions made at young age have more impact on the pension capital.

Although there are still not so many employers who make contributions to the 3rd pension pillar, a positive trend can be observed in the extent of contributions made – in three quarters of the last year, employers made contributions equal to 15.888 million euros, which is by approximately 15 % more than in the same period of 2022, shows the data of the Bank of Latvia.