News & Insights | 13th May 2022
4 Min Read
With living costs rising faster than they have in decades, and the invasion of Ukraine impacting already soaring global energy prices, everyone is feeling the financial pinch. Across the board inflation is rising faster than wages and employees and businesses alike are looking for ways to plug the gap.
One form of support that can easily be overlooked is employee benefit policies. From the traditional and popular, to the newer and less well known, many can play a part in easing the financial burden.
Let’s consider the two most popular employee benefit protection polices, life insurance, and income protection. If employees have dependants or financial responsibilities such as a mortgage, a company funded life insurance scheme can save the expense of paying for their own cover, or at least part of it. This benefit can prove even more important at a time when budgets are tight and emergency funds are being dipped into. Secondly, income protection policies will always provide peace of mind that part of an employee’s salary will continue to be paid even if they are on long term sick leave, and some additionally include annual increases in pay, in line with the retail price index.
But aside from these core benefits, many employers will offer others that may be less well promoted, such as dental insurance, health cash plans and employee discount portals. When proactively utilised, these benefits can help contribute towards the everyday cost of living.
Dental insurance can help to relieve the financial burden of essential dental work, whilst cash plans will cover a range of different treatments and levels of reimbursements. The most used of these are physiotherapy and optical cover, including contributing to the cost of a pair of new glasses and contact lenses.
Discount schemes may not seem capable of making a significant dent in the spiralling cost of living, but their cumulative impact can quickly add up. Retail discounts can be very useful in the current climate, so it can pay to take advantage of these and make use of multiple deals if possible. It is always worth checking with your benefits broker where these schemes may be available, as they can sometimes be hidden away as an unpublicised added extra to core employee benefit policies.
Something that shouldn’t be overlooked is the use of salary exchange, which can yield savings for both employee and employer, especially given the rise in national insurance rates this tax year. Under a salary exchange arrangement, the employee exchanges part of their salary for a benefit, most commonly pension contributions. By doing so, the employee is not only saving on national insurance, but also reducing any administration, as there is no need to reclaim additional tax relief they may be entitled to (all tax relief is given at source). But of course, it shouldn’t be forgotten that Employers also benefit from national insurance savings, which for pensions can be meaningful, as the saving is based on the total employee contribution.
Finally, and now more than ever, one of the most important benefits that can be offered to employees is company funded financial education or financial guidance sessions. These sessions can be provided either on a one-to-one basis or as a companywide presentation and they can prove invaluable, especially to employees early in their career in terms of building solid foundations for the future.
So, there’s plenty that can be done for both employees and employers and in summary we would suggest considering the following:
As an employer:
As an employee: