Helping your employees retain their "financial freedom" after retirement can be considered as part of your organisation's Corporate Social Responsibility (CSR) policy, investment and human-resource experts who attended a recent Stock Exchange of Thailand's (SET) seminar said.

No, do not get them wrong. The experts are not suggesting that your company must grant a pension or pay anything extra to employees after their retirement. But with inflation skyrocketing, they believe companies can assist workers in financial planning, educating them on savings and investment plans, or even help by deducting a small amount? from the employee's income for regular investment.

Krung Thai Asset Management (KTAM) acting executive vice president Wirote Tangcharoen said, for the past ten years, inflation had been at 3 per cent or lower annually, but from this year, "wealth-creation plan" has become crucial for everyone as latest figures show inflation is growing at a high 8.9-per-cent rate.

"HR [human-resources department] is usually tasked to look after the existing welfare given to employees. But beyond its traditional role, the HR can act as a centre that helps staff plan their post-retirement finances," Wirote said at the seminar held by the SET on "Employee's Wealth-Creation Plan: a New CSR Initiative That Can Win the Heart of Your Employee".

SET's senior vice president Kengkla Ruckphaopunt said that because of a demographic change, fewer people will be in the workforce and, thus, the government's social security fund (which gets a contribution from employees and employers) might be short of funding to sufficiently service all retirees in the future.

Hence, companies should assist employees in retaining their financial freedom after retirement. Long-term equity fund (LTF) is a tool that contributes toward this end.

However, the problem right now is not the tools. Rather, it is the understanding the employees have of inflation and its impact on their future well-being, Kengkla said.

KTAM's Wirote said that based on a 5-per-cent annual-inflation rate, if you are now 40 and wish to have Bt10,000 to spend every month after 20 years of retirement, you would need to accumulate as much as Bt11 million.

"Have you ever asked yourself, if you retire today, how you would like to live your life? People have been working hard and would like to reward themselves [after retirement], but they will need to save a lot.

"The power of saving is [great], but even more acute is inflation ... which is like a chronic disease," he said.

The provident fund an employee accumulates while working will not be enough to sustain him after retirement and so employees should have alternative investment measures, such as mutual funds, Wirote said.

Patchara Thanattrai, SET's vice president for human resources, said the stock exchange has made life easier for its staff by allowing them to make a direct debit of their salary for investment in an LTF on a particular date of the month. Employees, she said, can order from a fund-management company of their choice through SET's intranet. The organisation also offers loans to buy LTF.

"The difficulty is how [do we] make the employee feel that buying an LTF is as chic as buying a Louis Vuitton bag. We think if the employees feel wealthy and secure, whatever they do will be a success," she said.

Thammasat University Faculty of Commerce and Accountancy lecturer Suthisak Kraisornsuthasinee said it is best to deduct from an employee's salary for saving before diverting them to expenses, which is in line with His Majesty the King's "sufficiency economy" concept. "Besides benefiting ourselves, it is also benefiting the world because we don't make unnecessary purchases."

SET's Klengkla said that in addition to investing in mutual funds, employee wealth-creation plans can also include a "joint-investment programme", wherein the company can assist its employee in buying the company's stocks. This can be used as a saving for post-retirement time.

"Hence, shareholders and the employees will be [focused] in the same direction. When the company makes a profit and pays dividends to shareholders, the staff also receives it," he said.

A study found that out of 2,700 listed Japanese companies, 1,800 companies, which employ 1.3-million workers, have such joint-investment programmes, Klengkla said.

Wirote said the task of educating employees about investment and saving for post-retirement should not be left just to the HR. At Krung Thai Bank, which employs over 10,000 people, he said, it starts by educating the division heads. They are expected to transfer their knowledge acquired on investment and saving for retirement to the staff.

At a glance

--Companies must educate employees about the investment options available to them.

-- The provident fund employees have will not be enough to sustain them in later years.

-- Japanese companies offer 'joint investment programmes' for workers to buy company stocks.

-- A few others are training division heads who will, in turn, educate their teams.