Call Center Agent Retirement Pay: Is It Possible

Do you dream of ever retiring as a call center employee? The biting truth is majority of our call center workers do not foresee themselves growing old and retiring in the call center industry. Another sad truth is some of us have gone into this business hoping to land a job that pays very very well but end up not saving anything for the future. Why? For one thing, there is no systematic program that allows call center and BPO employees to set aside money for a comfortable retirement or even just for future financial investments. Sure there may be some big outsourcing companies that have conceptualized an employee retirement program but that is only co-terminus to their employees stay within the company. What about the other 95% of BPO workers in the Philippines who don't have such privilege? This is the reason why a BPO worker retirement fund must be institutionalized. It is one of the ways that can provide a positive impact for our BPO workers perception about their work and their perception of the outsourcing industry as a whole.

A good model

I've been studying the 401k plans of U.S. employees recently and I have concluded this would be the perfect model for such BPO employee retirement fund. In simple terms, a 401k plan is where an employee sets aside a certain self-determined percentage of his/her gross salary on a regular basis as part of his eventual retirement savings. This figure set aside will be equally matched by his/her employer. The sum of the two will now become the employee's contribution. Let's say the agent decides 10% of his monthly salary of 15,000 he will set aside, the employer matches it with their own 1,500. It now becomes 3,000 and over a period of one year, the employee would have saved 36,000 for his/her retirement. Let us now presume that this employee works as a call center agent for the next 5 years (which would be highly unlikely since opportunities are abound in the call center industry), his retirement savings would have now totaled 180,000 pesos! This figure does not include eventual interests/profits earned by this savings fund as it will also be invested into any established financial investment program at the employee's choosing. Over the years, it may well be possible to double or multiply 180,000 into a bigger amount depending on the type of savings investment option the employee chooses. The employees will have full control over how much they would be willing to set aside all throughout the course of this savings plan. He may increase or decrease his contribution depending on his financial needs and degree of comfortability to pay. To a certain extent, his employers will match his contributions every time.

What good would a 401k-like plan do for the agents?

For one thing, their contribution shall always be deducted from their gross salary NOT after taxes are taken away. This shall immediately lower their monthly tax deductions because their gross salary is "virtually" lowered. For example a call center employee gets 15,000 monthly and makes a 401k contribution of 1,500, he/she will only end up being tax deducted from a salary base of 13,500 instead of the full 15K. That savings is then doubled by the employer contribution each time and over the years will earn interest. Taxes turned into savings! This is a very good concept.

Apart from lowering taxes, this 401k-like retirement savings would also be transferable between employers that offer such options. So in case the agents move to greener pastures, their savings will be rolled over to their new employer and they can continue saving until such time they decide to retire or withdraw their savings for whatever reason.

Some business process outsourcing companies may not have the luxury to match their employees contribution. In this case, they may exercise an option to pay their half through profit-sharing, stock options and other means just like other US companies have provided their employees.

What's the catch with this 401k-plan for BPO workers?

As with all others monetary gains, the retirement fund shall be subject to tax upon withdrawal. That's a reality to deal with. However, at the end of the day, a BPO worker will be looking at a hefty sum to receive even after taxes are deducted because half of this savings benefit is their employers' contribution. Following the original 401k guidelines, the longer an employee has worked for the BPO industry, the bigger pay-off he/she can expect but there would be a corresponding penalty fee should the employee decide to withdraw his savings before a pre-determined retirable age. Once more, it is better to receive something like a retirement sum than nothing at all.

This looks like additional financial burden for outsourcing companies. How does this benefit the business side of things?

Outsourcers can look forward to better performing employees who will stay longer and who will feel good about the work they do. Working towards a meaningful goal such a savings fund will have a positive impact on employees' psyche. Providing a very good 401k-like program will encourage employees to stay in the company longer than look for another employer who may not be able to provide such privilege.

401K-like retirement option can also be the perfect bait to attract the best talents in the industry. Skyrocketing salaries have become a recognized major cause for concern among call center employers so offering such program shall be a good alternative than offering huge salaries upfront. As one of my colleagues mentioned when this retirement fund becomes a reality for BPO workers in the Philippines, it will no longer be a matter of which company will offer the best salary but rather which company can save me more money in the long run.

At the end of the day, a savings fund like this shall address 2 major problems our outsourcing industry faces today, staff attrition and unsustainable salaries of BPO employees. If I was a BPO employer, I would most definitely prefer to pay and invest on the workers I have now than perpetually spend on training new hires who may most likely move on and leave me as our current industry conditions experience.

How can this become a reality?

Such a concept cannot be accomplished at the private sector's level. Institutionalization of this proposal needs legislation as it involves taxing and financials. The full program must be enacted in Congress so that its provisions will be protected by law. Technical consultations and debate would be needed to determine the scope and accountability of both employer and employees. This is one of the key projects that ACCAP - The Association of Call Center and BPO Agents have conceptualized and presented over media in their press conference yesterday. They shall fight for such bill to be enacted into law as part of their vision to improve lives of all business process outsourcing employees in the Philippines. I encourage you to visit their website accap.ph to find out what a call center agent Congress representative can do for all of us call center employees.

Posted in: Call Center Party List