International Benefits Update – Q2 2021

In the second quarter 2021, several countries enacted changes to pension provisions as part of efforts to boost old-age savings and financially support employees during COVID-19 pandemic. Note other updates for Caregivers and Paid Leave provisions as well as updates to labor codes.

Europe, the Middle East, and Africa (EMEA)

Eurasian Economic Union Extends Pension Eligibility

The Eurasian Economic Union (EAEU)—which is made up of the countries Armenia, Belarus, Kazakhstan, Kyrgyzstan, and Russia—has extended eligibility of mandatory pension coverage to include employees in all member states. Under the new provision, employees with 12 full months of employment in an EAEU member state can avail old-age, disability, and survivor benefits in any other EAEU member state. Employment in multiple EAEU states may be eligible for multiple pensions. Pension calculation will vary by country and local legislation must be consulted before implementation. This change took effect on January 1st, 2021.

France Enacts Law for Mid-Year Health Insurance Changes

The French government has implemented a new law called Résiliation Infra-Annuelle (RIA) which allows mid-year changes to supplemental mandatory health insurance plans. After the initial 12-month period, employers will be able to terminate supplemental health plans directly or through the new insurer. Employers are required to provide one month notice to make the change. Previously, employers were only allowed to make changes by October 31st with two months’ notice or on individual policy’s anniversary date. RIA took effect on December 30th, 2020 and only applies to health insurance plans.

Ghana: New Group Insurance Mandates

Indicated to be implemented in 2021, the government in Ghana has proposed new rules for employers with 15 or more employees. Employers are required to take out life insurance and workers’ compensation covering all employees. The level of coverage is yet to be specified.

Ireland Illness Benefit Waiting Period Lowered

To financially aid employees in time of sickness, the Irish government has reduced the waiting period for Illness Benefit Payment from six days to three days. Eligible employees insured under the Pay Related Social Insurance will get paid from fourth day of illness. The change took effect on March 1st, 2021.

Ireland Implements New Eligibility for Adoption and Parents’ Leave

Effective March 27th, 2021, Ireland implemented the Family Leave and Miscellaneous Provisions Act 2021. Under the law, Paid Parents’ Leave is extended from two weeks to five weeks for each parent. Paid by the Department of Social Protection, eligibility for this leave increased from one year to two years and is non-transferable between parents. The new law also revised eligibility for Adoption Leave by extending it to male adopters, including same-sex male couples.

Poland Implements Retirement Savings Plan for Small Companies

Effective January 1st, 2021, employers in Poland with fewer than 20 employees are required to automatically enroll all employees in Employee Capital Plans (PPKs). PPKs are private, defined contribution retirement savings plans. Employer contribution for the new plan is minimum 1.5% and maximum up to additional 2.5%, with employees contributing a minimum of 2% and a maximum up to additional of 2% of salary. The deadline for implementation is April 23rd, 2021, missing which will result in fine ranging PLN 1,000 to PLN 1 million. PPK is part of phased-out restructuring of Poland’s pension programs which began on July 1st, 2019.

Spain Announces New Parental Pension Supplement

Employees in Spain can now avail additional benefits under a new pension supplement for parents. Eligible employees will receive EUR 378 every year for each biological or adopted child. Benefit, paid out with the base pension in 14 payments annually, is limited up to four children. Enrollment for mothers is automatic when they claim a contributory pension, whereas father must apply to receive the benefits. The new provision, introduced on February 4th, 2021, replaces mother’s supplement. This benefit is aimed at increasing women’s pension and is part of Spanish government’s efforts to bridge gender pay gap.

South Africa Implements Annuitization of Provident Funds

South African government has implemented new rules for occupational provident fund members from March 1st, 2021. According to the guidelines, members are required to annuitize two-thirds of their account balance at retirement and the remaining balance to be taken out as a lumpsum. The new rule applies to fund members below age 55, with minimum account balance of ZAR 247,500. Previously, members were allowed to withdraw their entire account balance as lumpsum.

Slovakia Amends Labor Code

Slovakia has passed amendments to Labor Code with phased-out implementation of changes. From January 1st 2021, tax-exempt treatment of 13th and 14th month salaries is eliminated. Companies without cafeteria are required to offer employees option to choose from meal vouchers or meal allowances annually from January 1st 2021. Additionally, the meal vouchers are required to be electronic from January 1st 2023. Employees terminated at pensionable retirement age of 65 or older can receive severance from their employers from January 1st 2022. Additionally, Slovakian government released guidelines and legislative framework for remote working, which took effect on March 1st, 2021.

Switzerland Rolls Out Paid Leave for Caregivers

Switzerland has enacted changes under the Swiss Code of Obligations extending the current offering of paid leaves to caregivers. From January 1st 2021, employees can avail 10 days of paid leave per year to care for health impairments of family members, including spouses, life partners, siblings, and parents-in-law. Additionally from July 1st 2021, employees can take 14 weeks of leave over 18-month period to take care of a seriously ill or injured child. Leave can be taken for every child and every health impairment. Swiss government defines health impairment to include illness, accidents, and disability.

Ukraine Updates Retirement Age and Contribution Period

Ukraine government has updated retirement age and old-age contributions in an effort to mitigate the negative consequences of the aging population. Effective April 1st 2021, retirement age for women is 60 years, bringing it in line with retirement age for men. To retire at 60 years, minimum years of required old-age contributions before age 65 is increased from 27 years to 28 in 2021. This will be increased to 29 years in 2022 to gradually 35 years of contributions till 2028. Phased out increases to old-age contributions are part of 2017 pension reforms.

Ukraine Extends Parental Leave for Fathers

Effective May 9th 2021, paid paternity leave of up to 14 calendar days can be taken by fathers after birth of their child. If the child is being cared for by a single parent, the paternity leave may be granted to a relative caring for the child. Ukrainian government also extended parental leave provisions to include fathers. As per the changes, fathers can avail additional annual leave of 10 calendar days to care for an adopted child, a child with disabilities, or those with two or more children under 15. Additionally, fathers can take unpaid parental leave of up to three years.

Asia-Pacific (APAC)

Malaysia Extended EPF Early Withdrawal Option

Malaysian government has extended early withdrawal option under Employee Provident Fund (EPF) to all the members younger than age 55. From March 8th 2021, eligible members can withdraw a portion of their Account 1 balance. EPF members with more than MYR 100,000 can request to withdraw up to 10% of their savings capping at MYR 60,000 and members with less than that can request to withdraw up to MYR 10,000. Benefit will be paid over a period of 6 months. Policy change is intended to financially support employees during the COVID-19 pandemic.

Philippines Launches Mandatory Provident Fund

To boost retirement savings, the government of the Philippines launched a new mandatory provident fund called Workers' Investment & Savings Program (WISP) on January 1st 2021. WISP is a defined contribution plan and contributions to the plan are in addition to the existing social security contributions. Employees and employers are required to contribute 4.5% and 8.5% monthly gross salary respectively. Benefits are based on total accumulated account value and paid out as an annuity over 15 years.

New Zealand Implements Paid Leave for Miscarriages and Stillbirths

Starting from March 31st, 2021, the New Zealand government implemented three days of paid bereavement leave for miscarriages and stillbirths. Applying to both parties of a couple, employees can take the leave for loss of pregnancy prior to 20 weeks of gestation. Previously, this leave was provided to employees who suffered stillbirth after 20 days of gestation.

Vietnam Introduces New Labor Code

A new labor code took effect in Vietnam on January 1st 2021. Per the new provisions, retirement age for women will gradually increase from age 55 to 60 by 2035 and from age 60 to 62 by 2028 for men. Monthly overtime limits are increased from 30 hours to 40 hours and an additional day off to the national independence holiday on September 2nd, and payment for unused annual leave. Other changes under the new labor code include updated definition for employees, eligibility for employment contracts, work permits periods for foreign workers, protection from sexual harassment and discrimination in the workplace.