Need to know:
- April 2015’s pension freedoms have formed a gap in the market for bespoke pensions.
- Increasing pressure to publish pay data may lead to more employers doing so voluntarily.
- Technology and staff-driven benefits are likely to increase in popularity.
Through 2016 and beyond, employee benefits will evolve as staff wants and needs vary, and technology improves.
1. Bespoke pensions
Owing to the pension flexibilities introduced in April 2015, it is likely that employers will still be piecing together their strategy to assist employees in understanding their options. Pension products and communication to counteract lack of understanding could seep onto the horizon. Paul Craven, reward and benefits manager at Eversheds, says that the pension freedoms have created a “need for understanding and clarity for [employees] who do not feel able to make those decisions alone”.
The way in which employers communicate the pension changes is integral to staff comprehension of these, says Dupe Olowokere, global benefits manager at Travelex Global Support Centre. “The best thing employers can do is inform and educate; general financial education will equip employees with an understanding of the impact of the changes,” she explains.
The pension freedoms have also created opportunities for organisations to offer their workforces bespoke communication and financial education around the options available to them. Gary Brewer, head of reward, organisational development and HR at William Grant and Sons, says: “There is a clear responsibility upon employers to support, if not guide, employees through what is a veritable maze.”
2. Transparent pay reporting
It is no surprise that 2016 will bring more transparency from businesses when it comes to revealing what they pay staff, particularly because employers with over 250 workers will have to reveal differences in pay between male and female staff after a new clause was added into the Small Business, Enterprise and Employment Act in March 2015. This year may there see a keener eye passed over the pay differentials between males and females, says Evershed’s Craven.
Organisations may also face pressure through 2016 to voluntarily publish their pay data to reveal whether they have a gender pay gap, prior to it becoming a formal requirement later in the year.
3. Revamped salary sacrifice
In June 2015, former pensions minister Steve Webb, now director of policy and external communications at Royal London, stated that the Conservative government may reduce its £15 billion salary sacrifice bill in the July emergency Budget. Although that did not occur, the government is still monitoring salary sacrifice schemes.
Craven believes the popularity of salary sacrifice schemes is declining, which increases the likelihood of these ceasing over time, due to concerns around how the government may seek to recoup losses of revenue. However, he adds: “When one considers that the government benefits from schemes [such as] car salary sacrifice, in terms of increased registration fee revenue for example, and new cars bring greater environmental benefits in terms of lower or zero emissions, I suspect moves on this front may not happen, and we may see continued, even increased use.”
4. Technological developments
Technology-driven health benefits, such as telemedicine and health and fitness tracker apps, have blossomed in popularity over the last couple of years, which is why 29% of human resources professionals intended to spend more on benefits technology in 2015 than they did in 2014, according to Thomsons Online Benefits’ 2015 Global employee benefits watch, published in October 2015.
To counteract the potential spending cuts to the NHS, it is imperative to pledge greater investment in health and wellbeing benefits, says Mark Carman, director, communication services at Edenred. “Technology will continue to drive the benefits agenda over 2016, enabling [employers] to access and update benefits packages tailored to their needs,” he adds.
Travelex Global Support Centre’s Olowokere believes that telemedicine may come into its own in 2016’s benefits market. “Telephone and web-based GP services will continue to gain a foothold as employees seek speed and convenience, and providers seek to differentiate their offering,” she says.
John Fitzgerald, global compensation and benefits partner at insurance firm XL Catlin, adds: “More virtual employee engagement will continue to grow simply because the cost is so much lower than face-to-face communication.”
5. Personalised benefits
As employees’ personal situations vary, it is likely the market will react to their ever-changing needs by offering more bespoke and personalised perks.
There is great potential for employers to utilise such arrangements, says Andrew Drake, head of flexible benefits at JLT Employee Benefits: “Employers are likely to offer more benefits that affect employees’ everyday lives, such as voluntary benefits and work-life balance perks.”
Choice is key when it comes to engaging the workforce of the future with benefits, which is why 2016 may bring a wave of evolutionary and technology-driven benefits to support, motivate and retain employees.