More than a third of respondents said their overall benefits package costs more than 20% of salary, according to research by Towers Watson.
Its Benefits health check survey, which questioned employers with between 500 and 2,000 employees, found that 60% of respondents have a consistent philosophy and strategy across their benefits, and that it is aligned with their business needs.
However, more than half of respondents do not know how effective their benefits plans are in supporting their business needs in practice.
Of those that have metrics in place to assess the effectiveness of their benefits plans, few are confident that they are using the correct measures.
Pension arrangements
The research also found that respondents with defined benefit (DB) pension schemes have higher benefit costs than those that only offer defined contribution (DC) pension arrangements.
The priority for respondents with DC pensions is improving member engagement, while respondents with DB pensions are focused on de-risking.
Over the next three years, respondents offering DC arrangements are planning to review the investment choices available to employees, improve governance and introduce annuity broking.
Peter Routledge, London retirement solutions managing director at Towers Watson, said: “With more than half of employers saying they have reviewed one or all of their pension or benefit plans in the last year, it is clear that there is a desire to align benefits with business needs.
“As such, the ability to measure and monitor how well pension and benefit provision is working will be essential in ensuring that these plans remain fit for the future.”
