Income protection programmes serve as a back-up to employees’ salaries in the event that an employee is sick, disabled or no longer able to work. Some countries mandate income protection programmes by law. For example, Canadian organisations pay into a fund that provides income protection in the case of a disability. Take, for instance, the University of Alberta, which offers a monthly income of 70 per cent of salary to employees who become severely disabled (http://www.hrs.ualberta.ca/docs/Benefits/Guides/Academic_Staff.doc). In the Unites States employers make 50 per cent of an employee’s contribution to social security so that income is protected in case of death, or of a disability that prevents the employee from doing substantial work for one year, and also when an employee reaches retirement age. For example, an employee who is about 40 years old, who earns an annual salary of $90 000, and is expected to continue to earn this salary until retirement age, would receive about $1400 a month if he decided to retire at age 62, about $2000 a month if he retired at age 67, and about $2500 if he retired at age 70.
Other types of benefits under the income protection rubric include medical insurance, pension plans and savings plans. These are optional benefits that organisations provide, but they are becoming increasingly important, and often guide an applicant’s decision to accept a job offer. In fact, a recent survey including both employees in general and HR professionals in particular showed that health care/medical insurance is the most important benefit, followed by paid time off and retirement benefits.
Follow