86% of financial services employers offer salary sacrifice

The majority (86%) of respondents in the financial services sector offer benefits to staff via salary sacrifice arrangements, up from 78% in 2013, according to research by Thomsons Online Benefits.


Its 2014 Employee rewards watch financial services research, which surveyed nearly 70 employers that represent 180,000 employees, found that 44% of respondents retain the national insurance contribution (NIC) savings in full, while 14% pay the saving into the benefit as a top up and 8% use the saving to reduce the cost of the benefit to employees.

Pension schemes

The research also found that 84% of respondents provide a pension scheme to staff. Nearly two-thirds (62%) provide a group personal pension, while 26% provide a group stakeholder pension.

More than half (54%) of respondents cited engaging employees as the biggest challenge around their pension scheme, while 33% cited employee communications, 31% cited administration and 15% cited payroll processing.

Health and risk benefits

More than three-quarters (77%) of respondents provide health and risk benefits to staff.

The most common benefits offered include group life assurance (89%), private medical insurance (81%), an employee assistance programme (70%), group income protection (68%) and an occupational health service (46%).

More than a quarter (27%) of respondents do not know how much their total spend on health and risk benefits changed by in 2013.

However, 19% have increased the spend by between 5% and 9%, 14% have increased the spend between 1% and 4%, and 11% have increased their spend between 10% and 14%.

Flexible benefits schemes

More than half (57%) of respondents provide voluntary benefits and 46% provide flexible benefits to staff.

The most common benefits offered via a flexible benefits plan include childcare vouchers (86%), a pension scheme (64%), a bikes-for-work scheme (64%), holiday buy and sell (61%), private medical insurance (47%) and dental insurance (47%).

A third (33%) of respondents intend to increase the number of flexible benefits on offer in 2014, while 25% do not have any plans to update their flex scheme and 28% do not know.

The research also found:

  • 37% of respondents said total reward statements have been an effective communication tool.
  • Only 6% of respondents communicate their benefits on a regular basis.
  • 31% of respondents outsource all their benefits provision to a single provider, while 42% use separate pension and benefits providers.
  • 47% of respondents intend to offer role-by-role pay rises in the next 12 months, while 18% intend to offer standard pay rises across the organisation.

Paul Smolinksi, chief financial officer at Thomsons Online Benefits, said: “This year, nearly half of respondents in the sector expect to give role-by-role increases to pay, twice that in 2013, suggesting that many are already balancing financial incentives.

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“However, such radical changes cannot be achieved quickly or without significant uncertainty, pressure and upheaval among employees, which is reflected by increasing levels of absence in this year’s survey.

“In summary, we expect that 2014 will continue to place considerable demands on HR professionals in the sector, in modifying reward packages to meet new strategic demands, which will require a greater focus on efficient administration and communications.”