Employee incentive solutions
Long-term financial incentives and benefits are a rational way to support your company’s stability and the wellbeing of your employees by accumulating financial capital for them, investing it and/or providing insurance protections, and at the same time strengthening your reputation as an attractive employer.
The purpose of employer-sponsored employee investment insurance:
- To motivate and retain the company’s best employees
- To optimize personnel turnover costs and related taxes
- To provide extra income for employees when they retire
- To insure employees and provide for their wellbeing or that of their loved ones in case of misfortune
- Insurance premiums paid on behalf of employees are not taxed
The provision of social guarantees and employee incentives is supported by the state, so investment insurance contributions that an employer makes to accumulate capital for employees’ future and/or to insure them are not taxable if:
- Investment insurance contributions do not exceed 25% of the employee’s gross pay for the year.
- The term of the contract is at least 10 years or, when the employee is less than 5 years from the old-age pension age, if the term of the contract is at least 5 years.
Regarding the taxation of pay-outs under an insurance contract:
- Insurance pay-outs to an employee or their family members in case of misfortune are not subject to any taxes.
- Benefits paid at the end of an insurance term and partial withdrawals of capital are not subject to personal income tax if the recipient is less than 5 years from the old-age pension age, the contract was for at least 5 years, and the beneficiary was not changed for the end of the term.
Benefits for the employer:
- Reduced corporate income tax, since contributions are deductible from taxable income.
- Contributions for an employee are not subject to personal income or social insurance taxes.
- Helps create the image of a good employer and a modern company; by contributing financially to employees’ wellbeing, you help them save and avoid financial hardship in case of misfortune.
- Competitive advantage, since new employees prefer a socially responsible employer that provides employees with additional benefits in terms of savings accumulation and insurance protections.
Benefits for the employee:
- Additional social guarantees; the employee signs the contract and is both the policyholder and the insured.
- More money is saved up for the future.
- When supplementary covers are chosen, benefits are paid in case of critical illnesses, disability or accidental injury.
- Loved ones get significant financial support in case of death.
- Insurance coverage is valid all the time, all over the world, at work and when not at work.
- Tax benefits are available – employees can get a refund of up to 20% of insurance premiums they pay.