Protect the future of your business with Preferred Compensation

« Back to “Business Financial Planning”

In your business, you have employees who do the unusual, think creatively, and do more than is expected of them. These employees are vital to the future of small and medium businesses. If your company is to grow and be successful, you need experienced and talented employees.

Compensation is one of the first things potential employees consider when looking for a position. What does your compensation package say about your company? After all, employees equate compensation with their value to the company. Compensation packages can be linked to recruitment, retention, motivation and performance. Creative compensation alternatives are the small business’s competitive advantage.

If you want innovation from your employees reward them for new ideas. If you want employees to remain with your company instead of recruiting new ones every few months, offer them an increased salary. The bottom line is – if you want employees to work hard and be trusted with the challenges of your company – recruit them, reward them and value them. The future of your business could depend on it.

How does Preferred Compensation  work?

• It provides funding for increased salaries.
• There is a service agreement between you and the employee:
• You will pay the employee an increased salary.
• The employee will invest this in an endowment policy and cede it to you.
• If the employee remains with your company for a specified time, the cession is cancelled and the employee has access to the full amount of the policy.

How will it benefit your company?

• The increased salary acts as an incentive to the employee to stay with your company.
• You may use ‘vesting scales’ as motivation for the employee to stay.
• The increased salary is tax-deductible for your company.
• The employee does pay tax on the increased salary, but the payout from the policy is tax-free.
• Pro-active steps to retain highly skilled staff in a fair and tax-efficient way.
• Employees feel appreciated, and if they adhere to the terms of the agreement, it means extra cash in their pockets.