Provident funds

Why choose Howden?

Provident funds, which some companies still neglect or ignore, protect employees in situations that are (fortunately) not very common but which can have serious consequences. We can help you examine, develop, and oversee these funds for your employees. Learn about the fundamental principles of corporate provident funds.

What is a provident fund?

A provident fund aims to compensate employees or their families in the event of household income loss due to illness, disability, or death. It, therefore, protects employees against life events involving a reduced income.

Do businesses have to provide a provident fund?

Unlike complementary health insurance, businesses can choose whether to provide a provident fund for their employees.

Nevertheless, a provident fund may be compulsory in two cases:

The collective agreement or agreement within the sector to which the company belongs may require all companies in that sector to set up a provident fund for their employees.

A provident fund that at least provides cover in case of death is compulsory for professional and managerial staff.

The three main types of risk

Temporary incapacity (more commonly known as "sick leave")

Incapacity refers to a situation that prevents an employee from attending work for a period of time. For example, in the event of illness, the employee is placed on sick leave and receives social security daily benefits (IJSS in the French acronym), which are generally 50% of their salary.

The loss of income for the employee is, therefore, significant during this period, which is why the sick leave benefit from the provident fund can be used to supplement this allowance.

Disability

Disability cover pays an annuity or a lump sum to the insured person who becomes disabled due to a non-work-related illness or accident. There are three categories of disability:

• Partial disability
• Total disability
• Total disability and dependency

Death

In the event of the insured person’s death, the beneficiaries named as part of the provident fund (spouse, child, or other) may receive a lump sum and/or an annuity.

The main principles of the most common funds, depending on the coverage provided, are:

• Death benefit: a fixed amount of the employee's salary, which generally varies according to their family circumstances
• Spouse's pension: sum paid periodically to the spouse of the deceased
• Education annuity: sum paid periodically to children who have lost one of their parents, in particular, to finance their education
• Funeral expenses: a sum paid out to help cover funeral expenses

To understand your needs and revise your provident fund, we can assist you in auditing, negotiating, and implementing solutions tailored to your employees, HR policy, legal framework, and budget.

Please note : Beneficiary designation
The choice of beneficiaries for the death benefit is assigned by default in the contract unless the insured has completed the beneficiary designation form. This document designates the beneficiary(ies) of his/her choice and must be sent directly to the provident institution.
In such cases, it is important to ensure that the beneficiaries are changed, for example, if the family situation changes (birth of a child, divorce, marriage, etc.).

Quality of working life (QoL), a topical issue for all companies
Each year, absenteeism costs companies €60 billion. Employee dissatisfaction can also be extremely costly to the company as it can affect efficiency. Stress is estimated to account for 50-60% of all working days lost and can be exacerbated by long commuting times, lack of sleep, and sedentary lifestyles.

We have also partnered with experts and are here to assist you with this issue, which is more relevant than ever.