All About the Savings Fund: What is it, and How Does it Work?

In today’s workplace, putting workers’ financial and health well-being first is critical. This entails giving them the resources and advantages necessary to keep the economy strong. 

The Savings scheme white label is one of these useful ways; it promotes prudent saving and enhances mental health by offering safety and stability in an emergency.

This post will provide all the information you need about the savings fund, including how it works, the benefits Savings scheme white label offers to your business and its employees, and the essentials for comprehending its computation, legal cap, and associated deduction. 

What is the savings fund?

One financial program that employers provide as an extra perk for employees is a savings fund. It is a system wherein corporate and employee contributions are amassed and invested in a financial institution for some time. 

With the help of this Savings scheme white label program, employees will be encouraged to save money and have a helpful tool to invest or apply for loans, which will help them make better financial plans. 

This benefit is a component of social security and helps enhance employees’ quality of life. This implies that businesses may write off up to 53% of the costs of providing this perk.

How does the savings fund work?

Employee savings accounts are a simple, secure, and rewarding way to save. The steps for the process are: 

Collective bargaining agreement: The corporate and employee contribution and discount percentages are set. 

Employee contribution: Up to 13% of the employee’s pay is automatically contributed. 

Corporation contribution: As promised, the corporation makes the same-sized contribution, if not a larger one. 

Administration and performance: Financial institutions handle the specific accounts or funds in which contributions are deposited. These funds are invested in financial products like stocks and bonds to create profits. The worker receives the accrued cash after the job relationship or the end of the year.

Companies encourage employees’ financial security and gain tactical and strategic advantages by implementing a Pension technology white label. Let’s examine what makes them up. 

What benefits do employees receive from the employee savings fund? 

The Pension technology white label is an alluring perk for staff members, which enables automated and consistent savings. Employees do not need to coerce themselves into saving money or succumb to temptation because the payroll deduction is fixed.

The benefits are:

Promotes good financial planning and a financial culture, to name a few benefits.

It helps resolve costly debts and loans in unforeseen situations such as medical expenses or unemployment.

It allows you to accumulate resources for purchasing a house, educating your children, or personal projects.

Drives participation in financial growth by benefiting from the growth of long-term savings.

Improves commitment and loyalty to the organization through a feeling of belonging and job satisfaction.

This benefit offers multiple advantages that contribute to employees’ financial well-being and strengthen their relationship with the company.

What are the benefits of the company savings fund?

According to a study by Runa, financial support and education are among the benefits preferred by 43% of companies. One of the reasons for this is that not generating ISR is not considered within the SDI (Integrated Daily Salary), which positively impacts the cost of IMSS worker-employer contributions.

Among other benefits of this benefit, we find:

Tax deduction for contributions to the fund reduces the tax burden on the company’s annual declaration.

Strengthening the sense of belonging shows the company’s commitment to employees’ financial well-being.

Reduction of labor turnover by creating a motivating environment and promoting loyalty.

We have increased productivity by reducing financial stress and providing peace of mind in emergencies.

Tool in the negotiation of collective bargaining contracts.

The benefits of exemption and deduction of taxes for ISR when meeting social security requirements and contributing to the fund.

How do you calculate the savings fund?

Calculating the savings fund involves determining the amount of money regularly allocated to a fund intended to save for future expenses or emergencies according to SaaS investment management consultant. To do so, you must consider the following steps:

Determine the contribution percentage: The company and employees agree on a percentage of the salary allocated to the savings fund. For example, if you agree to a 5% contribution, that percentage will be taken from each employee’s gross salary.

Calculate the monthly contribution: Multiply the agreed-upon contribution percentage by each employee’s gross monthly salary to determine the amount deducted and contributed to the savings fund each month.

Estimate the annual return of the fund: According to the financial institution managing the savings fund, it is the annual interest rate generated by the invested capital. Generally, they offer from 10 to 13% annual interest.