In normal circumstances, people are often glad of the fresh opportunities a new year brings. But as 2008 draws to an end and 2009 beckons, many may be wishing the new year was over before it has even begun. The year ahead promises to be tough, with the UK now in a full-blown recession that could last into 2010 or even longer.
But compensation and benefits professionals should not get into the mindset of wishing their lives away because there is still plenty for them to do to help their organisations through these difficult times.
Although using benefits to aid recruitment may no longer feature on their list of priorities for the year ahead, compensation and benefits professionals should be thinking about how their strategy can help retain staff who are crucial to their organisation’s performance.
Motivation will be important not just in relation to these staff, but also for the workforce as whole. At times like these there is no place for bonus schemes that pay out regardless of the quality of performance, however, staff morale needs to be maintained, otherwise productivity will suffer.
One key benefit that employers may be forced to play closer attention to is pensions, particularly liabilities around defined benefit (DB) schemes. BT is just one company looking to manage the risk around its DB scheme more tightly, hoping to change it from final salary to career average, and to increase the pensionable age to 65 years. Others may look to close their DB scheme to future accrual for existing employees and switch to a defined contribution plan.
Compensation and benefits professionals could help their organisations meet the cost of funding pensions by implementing salary sacrifice around employees’ contributions, producing a much needed saving on national insurance contributions (NICs) for both employer and employee. With the announcement of a 0.5% increase in NICs in the Pre-Budget Report, salary sacrifice around tax-efficient perks is sure to become even more popular among employers.
In such cash-strapped times, it is important make sure you are getting the maximum value from your benefits spend, both in terms of what providers are prepared to offer and also employees’ commitment to go that extra mile.