Need to know:
- As the war for talent increases, voluntary benefits can provide a cost-effective method of creating a package to attract and retain staff.
- Everyday savings, such as on groceries, tend to be universally popular, but some employers are bringing in discounts on bigger items such as cars and real estate.
- Employers should be aware of how changing legislation is broadening the remit of a popular benefit, bikes-for-work schemes.
With unemployment at its lowest level since 1974, according to the Office for National Statistics’ April 2019 figures, employers of all sizes and sectors are having to compete to gain an edge in the market.
In addition, as new generations enter the workforce, expectations are shifting. According to War for talent, published by Benni in May 2019, 26% of employees aged between 22 and 37 have either left or considered leaving a job based on the benefits package, a considerable rise from the 11% of employees aged above 55.
This might suggest that the bigger the budget, the better position an employer is in, but voluntary benefits can mean that attractive reward packages are no longer solely the remit of large organisations.
If voluntary benefits arguably hold the key to staying competitive in the war for talent, then what do employers need to know about current and future trends?
Employee tastes
Enabling staff to pick from a wide range of discounts and tax-efficient schemes can cater to the increasing need for tailored, personal packages, says Kyle Addy, voluntary benefits director at Benni.
“Each person has their own unique needs, lifestyle, ambitions and budget,” he explains. “When [an employer has] voluntary benefits, it provides a broader choice for to all staff. It’s refreshing to have benefits that aren’t really driven by level, position, or even other factors like gender or age, for that matter.”
Nevertheless, there are some trends that remain universal, according to Declan Byrne, group development director at One4All Rewards. “About half [the voluntary benefits gift card market] is in the grocery sector," he explains. "A 5% discount becomes very attractive within [an employee's] overall spend in the year, particularly for those on medium to lower wages, but [it is] also taken right up to the top of [organisations].”
Saving trends
Some organisations in the US have gone from offering everyday savings to providing discounts on large expenditures, such as cars or real estate, says Mark Ramsook, sales and marketing director at Willis Towers Watson.
“[These employers] really broaden this to the full spectrum,” he says. “Ultimately, these are some of the biggest purchases someone can make and, in real terms, that’s a big saving.”
There is also an increasing trend to offer access to a savings vehicle within a voluntary benefits package, boosting financial wellbeing by deducting from pay before it reaches the employee.
“Providers are [also] coming into the lending space," Byrne adds. "[Loans] can be provided at very competitive rates [partly because] repayment is through the payroll, so there’s a lot of certainty and, therefore, the interest rate and flexibility is very competitive.”
Changing cycles
Bikes-for-work schemes are among the best-known benefits offered via salary sacrifice. Following an announcement by the Department for Transport (DFT) in June 2019, which removed the £1,000 cap, employees are now be able to choose from a wider range of bicycles.
Laurence Boon, product manager, Cyclescheme at Hawk Incentives, says: “[Now] the way to get those more expensive bikes really is for [the] employer to make the most of the new guidance and increase their scheme limit. The benefit of that is that [both employee and employer] can save the full saving on the total value.”
This will also help move people away from cars, having a broader impact on employee health, corporate social responsibility and, ultimately, the services offered by providers.
“E-bikes, cargo bikes and e-cargo bikes, all of which tend to be quite expensive, really have a big tick for those people who want to make a lifestyle change but a conventional bike doesn’t quite work for them," says Boon. “What we really want to get to is a much more holistic solution where we’re taking someone who has an interest and supporting them all the way through to becoming a cyclist.”
Modern expectations
Due in part to the complexity of offering perks such as insurance via a voluntary programme, it may take some time before benefits interfaces are able to entirely mirror the quick, consumer-centric approach employees are used to outside of work. These influences have nonetheless filtered in.
“We have all become accustomed to a world where we can look at a menu and choose items at the touch of our fingertips,” says Addy. Modern provisions are increasingly focused on convenience, choice and control, he adds.
Technology also allows employers to implement voluntary benefits for a wider range of staff. “Years ago, [employers would] have to put a computer down on the factory floor,” says Byrne. “[Now], everyone has a mobile phone, and these are all app-based portals, so what [employers are] getting is higher engagement.”
Having access on the go also means employees are better able to reap the rewards. With Newcastle Upon Tyne Hospitals NHS Trust’s mobile-optimised site, Benefits Everyone, employees can use perks any time, share them with friends and family, and access information about larger purchases via salary sacrifice at their own leisure.
Accessible benefits
Technology has driven, and will continue to create, fundamental changes across all types of benefits provisions, and voluntary schemes are no exception. However, this does not mean that employers must invest large sums in providing the flashiest platforms and programmes.
For Ramsook, high expenditure on voluntary benefits programmes, themselves focused on cost-efficiency, is counter-intuitive.
Therefore, while some employers might opt to pay for added extras, there are options for others to provide appealing packages on a shoestring.
“[They can be] offered to workforces [that] haven’t always historically been provided as rich a benefits offering, either by virtue of sector legacy or lower earnings brackets," Ramsook concludes. "It’s something the organisation can do to actually help [employees’] money go further and support their lifestyles and broader wellbeing.”
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