By: Nashalin Portrag, Head of FundsAtWork at Momentum
They’ve been called “rebels with a cause”, “digital natives” and “millennials on steroids”. There are over 15 Million of them in South Africa and globally their numbers equal the combined populations of China and the United States.* They are Generation Z (Gen Z).
Born between 1995 and 2009, this generation is currently between 10 and 24 years in age. The COVID-19 pandemic is likely to have a significant impact on Gen Z – the generation who will be instrumental in shaping the future success of South African businesses. If your clients want to attract and retain Gen Z’s skills and talent, they will need to develop employee benefits value propositions that address their needs, preferences and values. Here’s what we know about them at this point.
“Show me value, today and tomorrow”
Like Millennials, Generation Z do not instinctively embrace “saving for retirement”. Their natural inclination is to experience their benefits not only in the future but as they live life, in the present. This is one of the reasons value-added benefits which deliver tangible value in the ‘here and now’ are becoming increasingly important in the benefits mix.
In fact, 90 percent of financial advisers in a Momentum Corporate survey said that the value-added benefits offered by some employee benefits providers are of value to both the employee and the employer.**
Retirement benefits remain a priority
Whether they like it or not, Gen Z’s rising longevity makes retirement provision a priority. However without active intervention, there is a good chance that like their Millennial colleagues, Gen Z will intuitively adopt the practise of withdrawing their retirement savings when changing jobs. This will have dire consequences for their ability to save enough for a long retirement.
To avoid this “epic fail” (Gen Z speak), it will be essential that financial advisers and integrated technology-driven services empower Gen Zs to make smart, informed choices when leaving their job and at retirement, when choosing an annuity.
“Care what I care about”
Gen Z is passionate about social issues such as human rights, gender and racial equality, poverty and the environment. These issues come into play when Gen Zs make decisions about where to work and invest. The choice of investment portfolios for retirement savings will need to align with the social issues Gen Zs care about.
Death, disability and critical illness benefits remain essential
Many Gen Z’s lifestyles will be characterised by long hours of computer work, sedentary jobs, lack of quality sleep and increasing anxiety and depression in a stressful, always-connected work and home environment. This will fuel lifestyle-related chronic illnesses and disabilities, and make these benefits critical elements of the benefit mix.
Within the South African context, many Gen Zs are usually the most educated member of their family and often contribute to the financial wellbeing of their extended family. This makes life cover to address the financial needs of their loved ones should they pass away a non-negotiable.
Rewards for healthy lifestyles
Gen Zs prioritise holistic health and wellness. However, our data shows that, compared to other generations, Gen Zs have the highest percentage of “Healthy Heart” scores in the red zone. *** This is largely due to their status as smokers – a serious concern as smoking is one of the greatest risk factors for life-style related diseases.
Employee benefits for this generation should include engagement programmes which facilitate and reward healthy lifestyles. Such programmes will sensitise Gen Z employees to potential health risks and encourage behaviour change before the risk/s leads to a chronic condition and/or lifestyle-related disability.
Flexible working arrangements and portable benefits
Gen Zs find the flexibility of the gig economy, a working environment characterised by short-term contracts or freelance work, particularly appealing. However, traditional employment-based retirement funds are set up for permanent employees and typically exclude short-term contractors. Employers and retirement funds will need to relook these rules and structures to remain attractive to Gen Zs who prefer more flexible, shorter-term working arrangements.
Reimagine the employee benefits service experience for Gen Zs
Our research shows Gen Zs experience life digitally and expect quicker service than any other generation. Employers will need to partner with an employee benefits provider who has reinvented the service experience for the modern workforce.
* 2019 White Paper, Generation Fluid, Understanding the dynamics of today’s youth market, Joe Public SHIFT.
** Momentum Corporate survey, October 2019 – January 2020.
*** Source: Multiply Healthy Heart Score data for members registered for Momentum Corporate Employee returns.