Metropolitan Life Insurance Company 200 Park Avenue, New York, NY 10166 L080957192(exp0810)MLIC-LD...

Metropolitan Life Insurance Company 200 Park Avenue, New York, NY 10166 L080957192(exp0810)MLIC-LD

Study of International Employee Benefits Trends

Metropolitan Life Insurance Company 200 Park Avenue, New York, NY 10166 L0710119824(exp0711)

The Employee Benefits Advantage: Leveraging a Global Perspective

DIVERSE ECONOMIES AND DEMOGRAPHICS

INDIA

MEXICO

AUSTRALIA

UNITED KINGDOM

UNITED STATES

GDP POPULATION MEDIAN AGE (YEARS)

LIFE EXPECTANCY AT BIRTH (YEARS)

$ 4.2 trillion

$ 1.2 trillion

$681 billion

$ 2.1 trillion

$ 13.2 trillion

1.1 billion

107.0 million

20.2 million

59.7 million

299.0 million

23.8

25.6

36.7

38.9

36.0

63.5

75.4

80.6

78.9

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).

Benefits practices vary significantly from country to country based on government social programs, size and competitiveness of labor markets, and national culture and tradition.



Overview

•Business expansion

•Employee opportunities

•New competition

•Rapid growth

LE

SS

DE

VE

LO

PE

DM

OR

E D

EV

EL

OP

ED

•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

Using history as a guide, we know that economic development in individual countries tends to follow a familiar pattern.



Overview

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

In both developing and developed markets, vast populations are underinsured and unprepared for retirement.



INDIA

MEXICO

AUSTRALIA

UNITED KINGDOM

UNITED STATES

#1 #2 #3

Health insurance

Job security

Enough money to live on

Job security

Paying bills during sudden income loss

Job security






Health insurance

Job security

More time to spend with family

Health insurance

TOP THREE FINANCIAL CONCERNS AND WORK/LIFE GOALS OF EMPLOYEES

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.



Overview

INDIA

MEXICO

AUSTRALIA

UNITED KINGDOM

UNITED STATES

#1 #2 #3

Controlling health and welfare benefits costs; increasing employee productivity

Increasing employee productivity

Retaining employees

Retaining employees

Retaining employees

Helping employees make better financial decisions

Increasing employee job satisfaction


Attracting employees

Controlling costs

Addressing more of employees’ different needs

Controlling health and welfare benefit costs




MOST IMPORTANT BENEFITS OBJECTIVES CITED BY EMPLOYERS OFFERING BENEFITS

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.



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

A set of common challenges faces employers in the countries surveyed, including:



Overview

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

Solutions to these challenges may be found by leveraging a more global perspective and applying it to each country’s unique set of circumstances.


India – Profile

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

BENEFITS AT A GLANCE

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.


India – Employer Perspective

Overview


CONTROLLING HEALTH AND WELFARE BENEFIT COSTS

INDIA: MOST IMPORTANT BENEFITS OBJECTIVES CITED BY EMPLOYERS THAT OFFER BENEFITS

INCREASING EMPLOYEE PRODUCTIVITY

HELPING EMPLOYEES MAKE BETTER FINANCIAL

DECISIONS

ADDRESSING DIFFERENT ENEEDS OF EMPLOYEES

INCREASING EMPLOYEE JOB SATISFACTION

REDUCING HUMAN RESOURCES

ADMINISTRATIVE COSTS

ATTRACTING EMPLOYEES

RETAINING EMPLOYEES

96%

96%

90%

89%

88%

84%

88%

87%

Percentages have been rounded to the nearest whole number

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.


India – Employee Perspective

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.

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.


India – Employee Perspective

India

Australia

U.K.

Overview

Study

Methodology


APPROPRIATE HEALTH INSURANCE

INDIA: EMPLOYEES’ TOP CONCERNS ABOUT FINANCIAL SECURITY

JOB SECURITY

ENOUGH MONEY TO LIVE ON

ENOUGH MONEY FOR CHILDREN’S EDUCATION

ENOUGH MONEY TO PAY BILLS DURING SUDDEN INCOME

LOSSRESOURCES AND TIME TO

CARE FOR AGING PARENTS OR RELATIVES

BEING ABLE TO AFFORD QUALITY CHILD CARE

ENOUGH MONEY TO BUY A HOME

82%

81%

80%

79%

79%

73%

79%

76%

MORE TIME TO SPEND WITH FAMILY

71%ENOUGH MONEY SO ONE

PARENT CAN STAY HOME WITH CHILDREN

73%


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.


India - Conclusions

Benefits Strategies for Tomorrow, Today

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:

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.


Mexico - Profile

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


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


Mexico – Employer Perspective



MEXICO: MOST IMPORTANT BENEFITS OBJECTIVES CITED BY EMPLOYERS THAT OFFER BENEEFITS


CONTROLLING HEALTH AND WELFARE BENEFITS COSTS


REDUCING HUMAN RESOURCES

ADMINISTRATIVE COSTS

ADDRESSING DIVERSE NEEDS OF EMPLOYEES

HELPING EMPLOYEES MAKE BETTER BENEFITS

DECISIONS

RETAINING EMPLOYEES

99%

91%

85%

83%

83%

70%

79%

75%

HELPING EMPLOYEES MAKE BETTER FINANCIAL

DECISIONS

70%


82% of Mexican employers say they are having difficulty finding suitable talent to fill jobs despite the abundance of general labor.34

Mexican employers view benefits plans more as tools for increasing employee productivity and job satisfaction than for attracting and retaining workers.


Mexico – Employee Perspective


JOB SECURITY

MEXICO: EMPLOYEES’ TOP CONCERNS ABOUT FINANCIAL SECURITY

ENOUGH MONEY TO PAY BILLS DURING A SUDDEN INCOME LOSS

APPROPRIATE HEALTH INSURANCE

ENOUGH MONEY FOR CHILDREN’S EDUCATION

ENOUGH MONEY TO LIVE ON

MORE TIME TO SPEND WITH FAMILY

ENOUGH MONEY TO BUY A HOME

ENOUGH MONEY SO ONE PARENT CAN STAY HOME WITH

CHILDREN

79%

77%

75%

74%

72%

65%

71%

69%

RESOURCES AND TIME TO CARE FOR AGING PARENTS OR

RELATIVES61%

52%BEING ABLE TO AFFORD

QUALITY CHILD CARE


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


Mexico - Conclusions


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:

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.


Australia – Profile

India

U.K.

Study

Methodology

Overview

MARKET PROFILE

16th largest global economy37

GDP of $681 billion38


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



Australia – Profile


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


Australia – Employer Perspective

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


RETAINING EMPLOYEES

AUSTRALIA: MOST IMPORTANT BENEFITS OBJECTIVES OF ALL EMPLOYERS



ADDRESSING DIVERSE NEEDS OF EMPLOYEES

HELPING EMPLOYEES MAKE BETTER BENEFITS DECISIONS


HELPING EMPLOYEES MAKE BETTER FINANCIAL DECISIONS

REDUCING HUMAN RESOURCES ADMINISTRATIVE COSTS

89%

87%

82%

71%

68%

64%

66%

65%

Percentages have been rounded to nearest whole number.

Australian employers are feeling pressure to attract and retain talented workers.


Australia – Employee Perspective

Percentages have been rounded to nearest whole number.


OUTLIVING RETIREMENT MONEY

AUSTRALIA: EMPLOYEES’ TOP CONCERNS ABOUT RETIREMENT

BEING ABLE TO AFFORD HEALTH CARE IN RETIREMENT YEARS

HAVING TO WORK FULL-TIME OR PART-TIME TO LIVE COMFORTABLY

IN RETIREMENT YEARS

PROVIDING FOR YOUR SPOUSE/PARTNER’S LONG-

TERM CARE NEEDS

PROVIDING FOR YOUR OWN LONG-TERM CARE NEEDS

49%

44%

43%

39%

38%

HAVING ENOUGH MONEY TO TAKE CARE OF ELDERLY

PARENTS OR IN-LAWS

29%

43% understand retirement needs

42% planned for retirement

42% determined life insurance needs

35% determined income protection needs

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.


Australia - Conclusions

Study

Methodology


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: 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.


United Kingdom - Profile

India

Australia

MARKET PROFILE

6th largest global economy57

GDP of $2.1 trillion58


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



United Kingdom - Profile

India

Australia

Overview


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


United Kingdom – Employer Perspective

India

Study

Methodology

Overview

U.K.


RETAINING EMPLOYEESS

U.K.: MOST IMPORTANT BENEFITS OBJECTIVES OF EMPLOYERS THAT OFFER BENEFITS

ATTRACTING EMPLOYERES



CONTROLLING HEALTH AND WELFARE BENEFIT COSTS

83%

78%

75%

71%

54%

Percentages have been rounded to the nearest whole number.

Most U.K. employers offers some benefits, which companies see primarily as a means of retaining and attracting employees.


United Kingdom – Employer Perspective

India

Study

Methodology

Overview

U.K.


PENSIONS

U.K.: BENEFITS OFFERED BY EMPLOYERS THAT OFFER BENEFITS

PRIVATE MEDICAL INSURANCE (PMI)

LIFE ASSURANCE

LONG-TERM DISABILITY OR PERMANENT HEALTH

CRITICAL ILLNESS INSURANCE

TRAVEL INSURANCE

AUTO INSURANCE

94%

82%

66%

43%

31%

30%

27%

Percentages have been rounded to the nearest whole number.

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 expanding benefits beyond this minimum.


United Kingdom – Employee Perspective

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.

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.

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.


United Kingdom – Employee Perspective

India

Australia

U.K.

Overview


PENSION

U.K.: WHERE EMPLOYEES OBTAINED DIFFERENT FINANCIAL PRODUCTS

CRITICAL ILLNESS

LIFE ASSURANCE

PERSONAL ACCIDENT COVERAGE

PRIVATE MEDICAL INSURANCE (PMI)

48%

10%

34%

18%

11%

22%

12%

1%

51%

13%

32%

1%

3%

28%

14%

Workplace Outside Workplace Both

Among those who do own these products, most purchased them outside the workplace.


United Kingdom - Conclusions

India

Australia

U.K.

Study

Methodology

Overview


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:

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.


Contact your MetLife representative for more information

India www.metlife.co.in

Mexico www.metlife.com.mx

Australiawww.metlife.com.au

United Kingdom www.metlife.co.uk

United States www.whymetlife.com/international5


Study Methodology

Overview

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.


Study Methodology

Overview

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