Six in 10 (61%) small to medium-sized employers (SMEs) said they will change their approach to insurance-based employee benefits following the employer national insurance contributions (NIC) increase, according to new research by Canada Life.
This month, employer NICs have increased from 13.8% to 15%, while the level at which they start paying NICs has reduced from £9,100 to £5,000 per year.
The insurance and financial services firm surveyed 550 HR decision-makers at micro, small and medium-sized enterprises, with one to 249 employees.
Of those which are planning changes, more than a third plan to boost awareness and engagement of the benefits provided, rather than reduce provision. One-fifth (23%) intend to make benefits work harder to raise awareness of what is available.
Two in 10 (22%) SMEs said they will cut available employee benefits, 5% said they will stop providing any benefits, and 18% will change what is offered to cut costs. Medium-sized employers, with 50 to 249 employees, are more likely to reduce or change benefits.
The most popular employee benefits offered are group life insurance (29%), private medical insurance (27%), and annual health checks (26%). One in five (20%) cover employees for group critical illness, while 16% provide an occupational health service to help them back to work following sickness absences, and 14% cover for group income protection.
A total of 15% will encourage employees to pay for insurance health-related support services for themselves through salary sacrifice.
Chris Morgan, head of product and proposition strategy, protection at Canada Life, said: “Our findings show that under increasing cost pressures, many SMEs are reviewing the employee benefits they provide to find savings. Given their knowledge of the positive impact these benefits have on employee health and business productivity, workplace protection advisers are well-placed to support firms and ensure any changes are carefully considered.
“We know as an industry what a positive impact employee benefits can have on financial, physical and emotional wellbeing. It’s important that insurers and advisers work together to demonstrate this value and bring it to life for SMEs, so they can see why continuing to invest in employee wellbeing should remain a business priority.”
