Four reasons to review employee benefits
Once employee benefits are in place, the temptation to tick the employee benefit box as ‘job done’ can be irresistible. But therein lies folly, and here are four key reasons why.
Employee benefits that were once applicable for a workforce, even just 12 months ago, may not be relevant today.
Employee demographics change, new recruits come into a business, employees’ life stages change and so do their needs.
Benefits such as life assurance, retirement planning and healthcare may not have engaged some employees at a certain life stage; but once they have financial commitments or dependants, such benefits can be vital.
Benefits that were once seen as gilt-edged in a particular industry sector quickly become expected as standard, and employers need to keep up if they want to recruit the best.
The world of employee benefits never stands still. Some of the greatest minds in business spend their lives focused on how to improve the financial, physical and mental wellbeing of employees. In practice this means we now have a greater range and affordability of available support.
For instance, access to specialist oncologists, rehabilitation and counselling were once expensive additions to some health and wellbeing benefits. They now come as standard and at no extra cost.
It’s important to keep on top of what’s available.
Such benefits don’t just support employees, they can help a business achieve its objectives too. The right benefits can increase engagement and productivity, and help with recruitment and absence management.
Potential for savings change
There is potential for significant savings to be made with a regular review of benefits.
For example, employers can make great savings on their national insurance contributions by utilising salary exchange for pension contributions, which can be advantageous for employees too.
As health and wellbeing benefits are regularly enhanced, many now include benefits that employers will also be paying for standalone. For instance, an employee assistance programme (EAP) is often included at no extra cost alongside life assurance – one of the most popular employee benefits with nearly 10 million employees covered in the UK. EAPs are an increasingly popular benefit which are often purchased separately. A review can show if an employer is paying for this unnecessarily. This can also be the case for other benefits too.
Fees and administration costs vary hugely between different benefits, advisers, providers and suppliers. Just as it’s important to benchmark benefits with competitors, it’s also important to benchmark on costs to see where savings can be made.
Laws and regulations change
The Equality Act 2010, Written Statement of Employment Particulars which came into force April 2020, employment contracts, the removal of the default retirement age all have a bearing on employee benefits, and it’s important that the implications are understood and that benefits are compliant.
Every year the Chancellor’s Budget has a review of taxation which can affect the pension lifetime allowance. This can have serious tax implications for business owners and employees. Specialist guidance and advice is vital so employees have enough time to plan and mitigate the chance of unexpected tax when they come to draw their pension.
The onus is on the employer to ensure a workplace pension is fit for purpose. Regular governance is vital to ensure that it is, as well as to review appropriateness of investments for good member outcomes.
A well-managed employee benefits package is a great support to employer and employee alike, and a regular review is vital to ensure its potential is maximised.