| Issues Roundup |
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A Synopsis of
Benefit Trends
for 2008 |
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During 2008, employers throughout much of the region are
expected to keep a close eye on the design of their employee
benefit plans in order to distinguish themselves as an "employer
of choice" and to comply with changing legal requirements. Here
are some of the major benefit trends by market: |
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China
Supplementary pension plans: The
conversion to enterprise Annuities has
been slower than expected, as greater
regulatory clarity is lacking around tax
and portability rules. Many foreigninvested
enterprises (FIEs) are still
relying on book reserve plans.
Flexible benefits: More and more
employers are seeing flex programs as a
"wrapper" for various benefit programs.
To date, approximately 15% of FIEs
operate a flex program; only 15% of
FIEs are not considering a program.
Stock plans: Stock plans - primarily
stock option or stock appreciation plans
- are seen as a key retention tool. The
majority of plans are offered only to
senior employees.
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India
Supplementary pension plans: In
light of tax rules introduced in 2007
that require all contributions to nonapproved
provident funds to be subject
to tax, employers are seeking approval
of the fund or moving to industry-wide
provident funds.
Health care: Employer-provided
health insurance is projected to grow
more costly in 2008. As a result of the
deregulation of the insurance market,
premiums on group health care
policies are expected to increase by
10 to 50%
Simplified benefit plans: The Fringe
Benefits Tax continues to lead employers
to streamline their benefits structure to
avoid negative tax consequences. |
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Japan
Supplementary pension plans:
Employers are slowly complying with
legislation that requires tax-qualified
pension plans (TQPPs) to be closed
down by 2012. Currently, the majority
of retirement plans are defined benefit
(DB) plans. The number of defined
contribution (DC) plans is increasing,
but total assets are considerably smaller
than DB plans due to restrictions on
contributions. Frequently, employers are
turning to a DB/DC combination or a
hybrid approach. |
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Hong Kong
Mandatory Provident Funds (MPFs):
Employers should continue to track
drafted regulations that would enable
employees to opt out of a company
MPF plan and into an individual
MPF plan. It is not clear whether this
legislation will be implemented in
2008 or 2009.
Health care: The government is
considering the introduction of a
mixed health care system that would
be financed through contributions
and mandatory medical savings
accounts. Preliminary plans would
require employees to save three
to five percent of pay for medical
expenses. The government plans to
hold a public consultation on the new
model, including the issue of employer
contributions. |
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Hewitt Quarterly Asia Pacific
is made possible through the combined skills and experience of Hewitt consultants from across the Asia-Pacific region.
For further information please contact:
Hewitt Associates
2601-05 Shell Tower
Times Square
Causeway Bay
Hong Kong
Tel: (852) 2877-8600
Fax: (852) 2877-2701
editor-hqap@hewitt.com
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