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Endowment may become an effective solution of social security of health workers

A group endowment or “golden handcuffs” is one of the effective social security solutions for medical and other health workers, including the COVID-19 situation, as well as increasing their motivation.
Endowment may become an effective solution of social security of health workers

“Golden handcuffs” is considered an integral element of modern HR management widely used in developed countries. Tying up of the most highly qualified and valuable medical and other health workers is achieved by additional deferred motivation through group endowment.

In this case, the funds accumulated through insurance (and they must be correlated with salary), become the property of an employee only after a certain period, for example, 10-15 years. This is a kind of supplementary one-time pension or annuity. In the event of dismissal earlier than this time, the employee loses this opportunity.

Besides, such insurance will also provide payouts in case the insured employee’s death, his disability or temporary incapacity to work as a result of an accident, illness, for example, COVID-19, or critical illness. This will increase prestige of medical professions and reduce the outflow of medical personnel.

The specified model will be more effective if the formation of insurance funds will be carried out on the terms of co-financing, i.e. at the expense of the state and local budgets, charity funds, as well as employers’ deductibles and personal insurance contributions of medical and other health workers.

Target-oriented bonds and other financial instruments with a long maturity, incl. guaranteed by the government may become the source of funds for the formation of such an insurance fund by the state. The government will get a cheap long-term investment resource in the economy, since insurance companies, according to the legislation requirements, will place a significant part of insurance reserves in government and municipal securities, corporate papers of medical and pharmacological enterprises, and take financial participation in infrastructure projects.

To avoid improprieties by insurance companies, it will be necessary to “tie up” assets that represent the insurance reserves, establish standard insurance conditions, and substantially limit the amount of acquisition costs, including agent's commission.

There is already an appropriate infrastructure for the implementation of the social security model for medical and other health employees. Today, a pool of insurance companies is successfully operating in the Ukrainian insurance market, most of which have a work experience of about 20 years. They conclude over 4 million life insurance contracts every year, including 300 thousand long-term ones. The amount of insurance reserves managed by insurers is over UAH 10 billion, of which 52% falls on government bonds and 39% on deposits and accounts with leading banks in the country. According to the results of 2019, about 900 million UAH of investment income received is aimed at increasing insurance reserves, i.e. insured savings. In 2019, life insurance companies made 40 thousand insurance payments to citizens totaling about UAH 600 million, as well as redemption payments of about UAH 180 million.

According to the member of the commission, it is important to return to the discussion regarding amendments to the Ukrainian Tax Code aimed at stimulating the development of voluntary medical insurance and corporate long-term life insurance, as well as making appropriate changes to medical legislation regarding the use of life insurance as part of the social package of medical and other health workers. A successful use of "golden handcuffs" in the medical industry may be a precedent for other state employees, for example, teachers and civil servants.

Source: https://forinsurer.com/public/20/05/18/4893

Photos are from open sources.

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