Employers could save up to 35% on benefits costs by renegotiating supplier contracts, according to consultancy Hewitt Associates.
In particular, savings could be made by reviewing benefits such as private medical insurance, group life assurance and group income protection.
Colin Bullen, head of health and risk benefits at Hewitt Associates, said: “Companies are losing out by not reassessing their current contracts. Shrinking budgets, coupled with the effects of the recession, have presented an opportunity to review and reset priorities.
"In many instances, benefit providers have become extremely competitive on price and are willing to adjust their rates to attract and retain business – a situation that is unlikely to last indefinitely. Savings are realistically achievable if companies act now. For example, a company with 1,000 employees could save up to £200,000 per benefit conserving essential capital during this tough economic period.
“By seizing this opportunity, more advantageous terms for the next two to three years may be on the table; meaning companies can lock in significant savings without damaging employee morale.”
But employers should not simply look to cut benefits to reduce costs.
Bullen added: “In these challenging operating conditions, it is vital companies are not seduced by short-term benefit cuts. Blanket benefit cuts do not lead to enduring business advantages.
"We are urging companies to start 2010 by acting with an eye to the longer term. A well-structured benefits policy that is valued by employees typically results in more engaged employees and is proven to boost workforce motivation.
"Rather than just taking an axe to current benefit structures to control costs, employers should reshape their benefits to meet member needs and demand the best value for money from their providers.”
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