Finance Directors' Guide to Pensions
Employee wellbeing and benefits
Employers will pay a salary and maybe other types of cash remuneration and, on top of these, provide a range of non-cash benefits. The variety of benefits offered will vary from employer to employer.
Benefits that are most commonly provided include private health and life insurance; additional holiday; healthcare checks; contributions to childcare; and a company car available for private use. Most of us are aware of these benefits; however employers are also able to provide other benefits such as travel insurance, discounted mobile telephones and tablets or even wine club membership.
Benefits are often categorised as:
An attractive and flexible benefit package is one of the ‘wellbeing’ principles that can help to recruit good employees and keep them happy in their jobs. This in turn can impact positively on turnover, as well as absence and productivity rates. It can also be cost effective for the employer, where tax and national insurance savings can be made directly (such as pensions) or where salary exchange/sacrifice is used.
Having implemented your benefit package, it is vital that your employees are made aware of its existence and know how they can make it work to their advantage. Therefore, it is important to educate your employees about the benefits which are available to them. However, education may not be enough – you need to engage your employees. This means ensuring your employees fully understand what is available to them, the value this provides (perhaps through a personalised total remuneration statement) and what options they have. In turn, they can then make relevant and informed decisions and take responsibility, where they can, for both saving for later life and also their immediate benefit priorities.
Experience shows that whilst traditional benefits such as pension, private health and life insurance and additional holiday are still wanted, other benefit types are creeping onto the wish list:
The issue is that one size does not fit all and certainly won’t meet all of the corporate objectives. This is why having flexibility in the benefit package, backed with the right level of employee communication and education, is becoming more commonplace and advances in technology are increasingly able to deliver this.
When building a wellbeing and benefits strategy it is important to understand the needs of the workforce and the risks that exist within it. Only through initial analysis can we be sure to create a suite of benefits and a wellbeing strategy that is pertinent to the employees and provides a return on investment to the employer. We use our BWell analytical tool to help our clients understand their workforce before building the wider strategy.
Many companies are considering introducing a wider array of benefits to suit the needs of their diverse workforce, ensuring this also fits in with any employee wellbeing strategy they will have. Above, we outlined some examples of benefits that are now featuring in benefit packages, as well as the more traditional offering. However, this list is not exhaustive and it is extremely important to analyse and engage the workforce to ensure that what is offered is relevant and adds value.
We believe that all benefits offered to employees must have a return on investment to the employer otherwise there would be little point offering them. This return on investment can be as simple as improving attraction and retention of staff and reducing absence or as complex as improved productivity, reduced accidents and lower insurance premiums. Our analysis helps to identify what solutions are best placed to provide that return on investment.