Debi O’Donovan: economic downturn is causing employers to review benefits packages

The economic downturn is causing employers to review their benefits packages to ensure that they are both maximising cost efficiencies and engagement from employees.

With the pressure on to prevent spiralling salary increases in the face of rising inflation, we are finding that employers are increasingly turning their attention to their established benefits packages to help ensure that their staff feel suitably rewarded.

Simply looking at which benefits your organisation is already paying for, ensuring it is the best deal and is something that staff want, is a common first step when reviewing the effectiveness of benefits spend.

Those employers that have resisted flexible benefits to date, or have never got round to making use of salary sacrifice opportunities, are now looking at how these strategies can help cut costs.

The move away from expensive defined benefit pension schemes continues, with FDs examining the myriad ways to reduce liabilities and extricate themselves from this financial burden. In the last issue we examined buyouts, in this issue we put the spotlight on enhanced value transfers.

But planning during the next couple of years will not just be about streamlining costs on benefits, it will also be about increasing budgets to cope with the new personal accounts (PA) pensions regime, coming into law in 2012. We now know enough of the detail of how PA will run, for employers to be able to get their own pension plans up to a level to exclude offering PA or to start planning to run PA at their organisation.

No doubt there will be tweaks to the legislation right up until launch date, but if employers wait for the final version they will potentially be caught seriously short – both financially and legally.

Debi O’Donovan, editor