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Study of International Employee Benefits Trends. DIVERSE ECONOMIES AND DEMOGRAPHICS. GDP. POPULATION. MEDIAN AGE (YEARS). LIFE EXPECTANCY AT BIRTH (YEARS). INDIA. 1.1 billion. 23.8. $ 4.2 trillion. 63.5. MEXICO. 25.6. $ 1.2 trillion. 107.0 million. 75.4. 80.6. $681 billion.

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Study of International Employee Benefits Trends


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    1. Study of International Employee Benefits Trends

    2. DIVERSE ECONOMIES AND DEMOGRAPHICS GDP POPULATION MEDIAN AGE (YEARS) LIFE EXPECTANCY AT BIRTH (YEARS) INDIA 1.1 billion 23.8 $ 4.2 trillion 63.5 MEXICO 25.6 $ 1.2 trillion 107.0 million 75.4 80.6 $681 billion 36.7 20.2 million AUSTRALIA UNITED KINGDOM 78.9 38.9 59.7 million $ 2.1 trillion UNITED STATES 299.0 million $ 13.2 trillion 36.0 77.7 GDP = Purchasing power parity in international dollars, 2006. All other figures as of 2005. Source: World Bank (GDP and life expectancy), World Health Organization (population), United Nations (median age). The Employee Benefits Advantage: Leveraging a Global Perspective Benefits practices vary significantly from country to country based on government social programs, size and competitiveness of labor markets, and national culture and tradition.

    3. Aging population • Longevity • New family dynamics • Pressure on social security and health care systems • Retirement concerns • Work life balance • Work force migration • Spending power • Healthier lifestyles • Improved health care • Decline in birthrates • Business expansion • Employee opportunities • New competition • Rapid growth The Employee Benefits Advantage: Leveraging a Global Perspective Using history as a guide, we know that economic development in individual countries tends to follow a familiar pattern. MORE DEVELOPED LESS DEVELOPED Overview

    4. The Employee Benefits Advantage: Leveraging a Global Perspective In both developing and developed markets, vast populations are underinsured and unprepared for retirement. India • 55% of employees surveyed have not assessed income needs in case of disability • 20% have taken any retirement planning steps Mexico • 62% of employees surveyed have not taken steps to determine their household’s life insurance needs • 19% have taken retirement planning steps Australia • 58% have not taken steps determine their household’s life insurance needs • 43% have taken retirement planning steps U.K. • 22% of employees surveyed have not taken steps to determine their household’s life insurance needs • 70% have taken steps to determine their needs for retirement income Overview

    5. TOP THREE FINANCIAL CONCERNS AND WORK/LIFE GOALS OF EMPLOYEES #1 #2 #3 Enough money to live on INDIA Job security Health insurance Paying bills during sudden income loss MEXICO Job security Health insurance Enough money to live on Paying bills during sudden income loss Job security AUSTRALIA UNITED KINGDOM Enough money to live on More time to spend with family Job security Paying bills during sudden income loss UNITED STATES Enough money to live on Health insurance The Employee Benefits Advantage: Leveraging a Global Perspective Employees surveyed in these countries cite having enough money to live on and paying bills after a sudden income loss among their top financial concerns. For employees surveyed in the U.S., India and Mexico, health insurance is also among the top three financial concerns.

    6. MOST IMPORTANT BENEFITS OBJECTIVES CITED BY EMPLOYERS OFFERING BENEFITS #1 #2 #3 Controlling health and welfare benefits costs; increasing employee productivity Helping employees make better financial decisions Addressing more of employees’ different needs INDIA Increasing employee productivity Increasing employee job satisfaction Controlling health and welfare benefit costs MEXICO Increasing employee job satisfaction Increasing employee productivity AUSTRALIA Retaining employees UNITED KINGDOM Attracting employees Increasing employee job satisfaction Retaining employees UNITED STATES Increasing employee productivity Controlling costs Retaining employees The Employee Benefits Advantage: Leveraging a Global Perspective Employers have an opportunity to find better ways of attracting and retaining good workers in a tight labor market. In the highly developed markets of the U.K. and Australia, “retaining employees” is named most frequently by employers as a benefits objective. Overview

    7. The Employee Benefits Advantage: Leveraging a Global Perspective A set of common challenges faces employers in the countries surveyed, including: • Recruiting and retaining the best employees • Increasing productivity of employees • Managing the costs of benefits • Employees’ need for financial planning • Employees’ need for financial protection • The diminishing role of the state in health and social welfare programs Overview

    8. The Employee Benefits Advantage: Leveraging a Global Perspective Solutions to these challenges may be found by leveraging a more global perspective and applying it to each country’s unique set of circumstances. • Address global trends and best practices • Country-specific data and analysis will demonstrate the types of local distinctions • Domestic companies can gain a more global perspective Overview

    9. MARKET PROFILE • 3rd largest global economy3 • GDP over $4.2 trillion4 • Annual national income per capita: $8205 • Rapidly growing economy, but poverty is pervasive6 • Heavily agricultural (18% of GDP), but rapidly industrializing7 • Working age population (ages 15-64) expected to jump from 704 million in 2005 to 1.0 billion in 20308 • Median age: 23.8 years9 • Life expectancy at birth: 63.510 India – Profile

    10. Retirement benefits are dominated by a government-mandated employer benefit called the Gratuity, by which every employee, upon leaving his or her employer after more than five years of service, collects 15 days of salary for each year of service.11 • Workers may also save for retirement with a tax-favored vehicle called a Public Provident Fund, to which some employers also contribute. • The life insurance market is dominated by the government-owned Life Insurance Corporation of India (LIC), but private insurers are entering the Indian market. • A new regulatory body, the Pension Fund Regulatory and Development Authority, is expected to pave the way for more modern financial products. BENEFITS AT A GLANCE India – Profile

    11. TOP THREE FINANCIAL CONCERNS AND WORK/LIFE GOALS OF EMPLOYEES INDIA: MOST IMPORTANT BENEFITS OBJECTIVES CITED BY EMPLOYERS THAT OFFER BENEFITS CONTROLLING HEALTH AND WELFARE BENEFIT COSTS 96% INCREASING EMPLOYEE PRODUCTIVITY 96% HELPING EMPLOYEES MAKE BETTER FINANCIAL DECISIONS 90% ADDRESSING DIFFERENT ENEEDS OF EMPLOYEES 89% INCREASING EMPLOYEE JOB SATISFACTION 88% REDUCING HUMAN RESOURCES ADMINISTRATIVE COSTS 88% ATTRACTING EMPLOYEES 87% RETAINING EMPLOYEES 84% Percentages have been rounded to the nearest whole number India – Employer Perspective Indian employers surveyed place controlling costs and increasing employee productivity as more important benefits objectives than attracting and retaining talented workers which is hardly a surprising finding in a country with a huge labor surplus and an expanding population. Overview

    12. India – Employee Perspective Employees say that despite their need for retirement products and insurance, such benefits are not a major factor in their employment decisions. However any current ambivalence about employer benefits may be more attributable to a lack of employee education about the value of various benefits products than to a lack of need. • Nearly half (48%) of Indian employees surveyed whose employers do not offer benefits would be interested in purchasing retirement planning products through their employer, even if they had to pay 100% of the cost. • 51% of Indian employees currently lacking employer-provided benefits say they would be interested in purchasing term life insurance through their employer, even if they had to pay 100% of the cost.

    13. TOP THREE FINANCIAL CONCERNS AND WORK/LIFE GOALS OF EMPLOYEES INDIA: EMPLOYEES’ TOP CONCERNS ABOUT FINANCIAL SECURITY APPROPRIATE HEALTH INSURANCE 82% 81% JOB SECURITY 80% ENOUGH MONEY TO LIVE ON ENOUGH MONEY FOR CHILDREN’S EDUCATION 79% ENOUGH MONEY TO PAY BILLS DURING SUDDEN INCOME LOSS 79% RESOURCES AND TIME TO CARE FOR AGING PARENTS OR RELATIVES 79% BEING ABLE TO AFFORD QUALITY CHILD CARE 76% ENOUGH MONEY TO BUY A HOME 73% MORE TIME TO SPEND WITH FAMILY 73% ENOUGH MONEY SO ONE PARENT CAN STAY HOME WITH CHILDREN 71% Percentages have been rounded to the nearest whole number India – Employee Perspective When it comes to worries about retirement issues, a top financial concern among Indian workers surveyed is having enough money to take care of elderly parent or in-laws. Overview India Australia U.K. Study Methodology

    14. Indian employers regard controlling costs and increasing employee productivity as more important benefits objectives than attracting and retaining talented workers. Despite the country’s labor surplus, benefits are seen by employers in certain service-sector industries – or in areas in which multinational outsourcing business has intensified demand for labor—as a way to satisfy highly skilled without driving up wages: Benefits Strategies for Tomorrow, Today • Companies offering health and life insurance provide two financial solutions that are in high demand. • Retirement planning products can provide employers with a long-term strategic option for meeting benefits goals. • Employers can work with providers of financial products to educate employees on how benefits can improve their financial security and quality-of-life. • Offering voluntary benefits is a way to increase the value of benefits offerings without increasing costs. India - Conclusions

    15. MARKET PROFILE • 12rd largest global economy21 • GDP of $1.2 trillion22 • Annual national income per capita: $7,87023 • Rapidly growing economy, the “informal” economy has a sizeable presence • Mix of modern and outmoded industries; GDP: 70% services, 26% industry, 4% agriculture24 • Working age population (ages 15-64) expected to jump from 66.1 million in 2005 to 86.4 billion in 203025 • Median age: 25.6 years26 • Life expectancy at birth: 75.4 years27 Mexico - Profile

    16. A mandatory retirement savings system is paid for by employers, at 2% of wages, and managed in individual investment accounts by registered organizations known as AFORES.28 • To help restore its public employee pension system to solvency, Congress voted to raise, by 2028, the retirement age for civil servants to an average of 59 years from 49.5 years and workers’ pension contributions to 6.125% from 3.5% by 2012—echoing reforms of private-sector pensions approved a decade ago.29 • Mexico has a decentralized national health system, but employees who can afford private care tend to use it and buy insurance for it.30 BENEFITS AT A GLANCE Mexico - Profile

    17. TOP THREE FINANCIAL CONCERNS AND WORK/LIFE GOALS OF EMPLOYEES MEXICO: MOST IMPORTANT BENEFITS OBJECTIVES CITED BY EMPLOYERS THAT OFFER BENEEFITS INCREASING EMPLOYEE PRODUCTIVITY 99% INCREASING EMPLOYEE JOB SATISFACTION 91% CONTROLLING HEALTH AND WELFARE BENEFITS COSTS 85% ATTRACTING EMPLOYEES 83% REDUCING HUMAN RESOURCES ADMINISTRATIVE COSTS 83% ADDRESSING DIVERSE NEEDS OF EMPLOYEES 79% HELPING EMPLOYEES MAKE BETTER BENEFITS DECISIONS 75% 70% RETAINING EMPLOYEES HELPING EMPLOYEES MAKE BETTER FINANCIAL DECISIONS 70% Percentages have been rounded to the nearest whole number Mexico – Employer Perspective Mexican employers view benefits plans more as tools for increasing employee productivity and job satisfaction than for attracting and retaining workers. 82% of Mexican employers say they are having difficulty finding suitable talent to fill jobs despite the abundance of general labor.34

    18. TOP THREE FINANCIAL CONCERNS AND WORK/LIFE GOALS OF EMPLOYEES MEXICO: EMPLOYEES’ TOP CONCERNS ABOUT FINANCIAL SECURITY JOB SECURITY 79% ENOUGH MONEY TO PAY BILLS DURING A SUDDEN INCOME LOSS 77% APPROPRIATE HEALTH INSURANCE 75% ENOUGH MONEY FOR CHILDREN’S EDUCATION 74% 72% ENOUGH MONEY TO LIVE ON MORE TIME TO SPEND WITH FAMILY 71% ENOUGH MONEY TO BUY A HOME 69% ENOUGH MONEY SO ONE PARENT CAN STAY HOME WITH CHILDREN 65% RESOURCES AND TIME TO CARE FOR AGING PARENTS OR RELATIVES 61% BEING ABLE TO AFFORD QUALITY CHILD CARE 52% Percentages have been rounded to the nearest whole number Mexico – Employee Perspective The top three concerns of Mexican employees surveyed about financial security are job security, having enough money to pay bills during sudden income loss and having appropriate health insurance

    19. Mexico has long opened its borders to multinational investment, and is one of the leading nations in facilitating trade agreements worldwide. But these developments, while boosting domestic economic growth at an enviable rate, can reshape the workplace environment. Mexican employees increasingly exposed to multinational influences will doubtless be drawn into the very human game of drawing comparisons. And in such an increasingly competitive landscape, Mexican employers looking to maintain top-quality workforces will increasingly feel compelled to reassess their own benefits practices: Benefits Strategies for Tomorrow, Today • Offer a greater range of benefits such as health insurance and an employer sponsored savings fund than is standard practice. • Educating employees on the importance of financial planning, insurance and retirement savings can deliver significant benefits to both companies and workers for a minimal investment on the part of Mexican employers. • Voluntary benefits represent a valuable and cost-effective tool for employers. Mexico - Conclusions

    20. MARKET PROFILE • 16th largest global economy37 • GDP of $681 billion38 • Annual national income per capita: $35,99039 • Developed economy, capitalist system • Dominated by services sector (70% of GDP)40 • Working age population (ages 15-64) expected to grow from 13.7 million in 2005 to 15.5 million in 203041 • Median age 36.7 years42 • Life expectancy at birth: 80.6 years43 Australia – Profile Overview India U.K. Study Methodology

    21. Superannuation is a government-regulated, mandatory retirement savings program for all Australian workers; 9% of employee salary is contributed annually by employers; additional contributions are voluntary.44 • All superannuation funds have an investment component; many also have, on either a voluntary or mandatory basis, an insurance component: term life, disability and income protection.45 • Employees may purchase additional insurance benefits if offered, and costs are deducted from their investment account.46 • Government covers all Australians, but private health insurance is common.47 BENEFITS AT A GLANCE Australia – Profile

    22. TOP THREE FINANCIAL CONCERNS AND WORK/LIFE GOALS OF EMPLOYEES AUSTRALIA: MOST IMPORTANT BENEFITS OBJECTIVES OF ALL EMPLOYERS 89% RETAINING EMPLOYEES INCREASING EMPLOYEE PRODUCTIVITY 87% INCREASING EMPLOYEE JOB SATISFACTION 82% ADDRESSING DIVERSE NEEDS OF EMPLOYEES 71% HELPING EMPLOYEES MAKE BETTER BENEFITS DECISIONS 68% ATTRACTING EMPLOYEES 66% HELPING EMPLOYEES MAKE BETTER FINANCIAL DECISIONS 65% REDUCING HUMAN RESOURCES ADMINISTRATIVE COSTS 64% Percentages have been rounded to nearest whole number. Australia – Employer Perspective Australian employers are feeling pressure to attract and retain talented workers. In 2007, 61% of Australian employers surveyed experienced difficulty in finding the right people to fill jobs, up from 32% in 2006 and significantly above the global average of 41%53

    23. AUSTRALIA: EMPLOYEES’ TOP CONCERNS ABOUT RETIREMENT 49% OUTLIVING RETIREMENT MONEY BEING ABLE TO AFFORD HEALTH CARE IN RETIREMENT YEARS 44% HAVING TO WORK FULL-TIME OR PART-TIME TO LIVE COMFORTABLY IN RETIREMENT YEARS 43% PROVIDING FOR YOUR SPOUSE/PARTNER’S LONG-TERM CARE NEEDS 39% PROVIDING FOR YOUR OWN LONG-TERM CARE NEEDS 38% HAVING ENOUGH MONEY TO TAKE CARE OF ELDERLY PARENTS OR IN-LAWS 29% TOP THREE FINANCIAL CONCERNS AND WORK/LIFE GOALS OF EMPLOYEES Percentages have been rounded to nearest whole number. Australia – Employee Perspective 41% of Australian employees surveyed hope to retire in their 50s – 45% in their 60s, given their ambitions plans for retirement and long life expectancy, most Australians are worried about having enough money to afford it. 43% understand retirement needs 42% planned for retirement 42% determined life insurance needs 35% determined income protection needs

    24. Australia’s superannuation funds have succeeded in providing workers with fundamental coverage for retirement and family protection in case of disablement, but this success appears to have bred a degree of complacency among workers when it comes to savings and insurance. However, the need for additional financial advice and education about their value opens a door for growth in employer-provided benefits. As employees become aware that economic and demographic realities could threaten their visions of financial security and retirement lifestyle, they will increasing look to augment their current superannuation coverage. This will provide an opportunity for employers looking to improve employee retention rates, as well as for super funds looking for ways to grow their asset base: Benefits Strategies for Tomorrow, Today • In creating benefits plans, employers should first focus on educating employees about financial risks and appropriate coverage. • Financial planning services will likely prove appealing to the large share of Australian employees that are worried about paying for retirement but have done little to prepare. • Employers may find good results in constructing benefits packages that provide a high degree of personalization, with offerings that span insurance, investments and work/life options. Australia - Conclusions Study Methodology

    25. MARKET PROFILE • 6th largest global economy57 • GDP of $2.1 trillion58 • Annual national income per capita: $40,18059 • Developed, wealthy nation • Dominated by services sector (73% of GDP)60 • Working age population (ages 15-64) expected to grow from 39.7 million in 2005 to 40.7 million in 203061 • Median age 38.9 years62 • Life expectancy at birth: 78.9 years63 United Kingdom - Profile India Australia

    26. BENEFITS AT A GLANCE United Kingdom - Profile • The National Health Service provides publicly funded health care. However, private health insurance is common.64 • The government provides the Basic State Pension, and provides for tax incentives for workers to fund their own personal pensions.65 • The insurance and financial products markets are highly developed and competitive.66 Overview India Australia

    27. TOP THREE FINANCIAL CONCERNS AND WORK/LIFE GOALS OF EMPLOYEES U.K.: MOST IMPORTANT BENEFITS OBJECTIVES OF EMPLOYERS THAT OFFER BENEFITS 83% RETAINING EMPLOYEESS ATTRACTING EMPLOYERES 78% INCREASING EMPLOYEE JOB SATISFACTION 75% INCREASING EMPLOYEE PRODUCTIVITY 71% CONTROLLING HEALTH AND WELFARE BENEFIT COSTS 54% United Kingdom – Employer Perspective Most U.K. employers offers some benefits, which companies see primarily as a means of retaining and attracting employees. Overview India U.K. Percentages have been rounded to the nearest whole number. Study Methodology

    28. TOP THREE FINANCIAL CONCERNS AND WORK/LIFE GOALS OF EMPLOYEES U.K.: BENEFITS OFFERED BY EMPLOYERS THAT OFFER BENEFITS 94% PENSIONS PRIVATE MEDICAL INSURANCE (PMI) 82% LIFE ASSURANCE 66% LONG-TERM DISABILITY OR PERMANENT HEALTH 43% 31% CRITICAL ILLNESS INSURANCE 30% TRAVEL INSURANCE AUTO INSURANCE 27% Percentages have been rounded to the nearest whole number. United Kingdom – Employer Perspective The majority of U.K. companies offer their employees pensions and private medical and life insurance however few employers have sought to differentiate themselves by expandingbenefits beyond this minimum. Overview India U.K. Study Methodology

    29. United Kingdom – Employee Perspective For a group that has been relatively pro-active in assessing and planning for their financial needs, U.K. employees surveyed seem less than fully prepared in many other health-related issues. 40% of U.K. employees surveyed are extremely concerned with having more time to spend with families. Behind job security and having enough money to live on. • 45% of U.K. employees have critical illness insurance. • 35% have long-term disability, or permanent health insurance. • 26% have dental insurance. • 11% have long-term care insurance.

    30. TOP THREE FINANCIAL CONCERNS AND WORK/LIFE GOALS OF EMPLOYEES U.K.: WHERE EMPLOYEES OBTAINED DIFFERENT FINANCIAL PRODUCTS 48% PENSION 22% 12% 10% CRITICAL ILLNESS 34% 1% 18% 51% LIFE ASSURANCE 13% 11% PERSONAL ACCIDENT COVERAGE 32% 3% 28% PRIVATE MEDICAL INSURANCE (PMI) 14% 1% Workplace Outside Workplace Both United Kingdom – Employee Perspective Among those who do own these products, most purchased them outside the workplace. Overview India Australia U.K.

    31. Benefits Strategies for Tomorrow, Today United Kingdom - Conclusions U.K. companies recognize the potential value of benefits programs in attracting and retaining workers—a task that looks to become increasingly challenging due to demographic changes occurring the workforce: Overview • Consider financial education programs to assist employees in making the many important decisions facing workers forced to shoulder more responsibility for their own financial security. • Employers can increase the impact of their benefits plans by offering programs that provide employees with better work/life balance. • When expanding benefits plans, start with insurance. India Australia U.K. Study Methodology

    32. Contact your MetLife representative for more information Indiawww.metlife.co.in Mexicowww.metlife.com.mx Australiawww.metlife.com.au United Kingdomwww.metlife.co.uk United Stateswww.whymetlife.com/international5

    33. Study Methodology The MetLife Study of International Employee Benefits Trends was conducted between November 2006 and March 2007 by GfK Custom Research, one of the top global market research consultants. Results were obtained through face to face, telephone and online interviews. The targeted sample of each country was designed to appropriately represent the full-time employee population base. Totals do not always equal 100% due to rounding. Overview

    34. Study Methodology Overview