A pension is a foundation savings vehicle and one of the most valued employee benefits. Although many employers haven’t chosen this path, they should see auto-enrolment as an opportunity not a burden. Not just to fulfil a paternal instinct, but to distinguish their company as a great place to work.
It is quite clear that when it comes to financial protection and healthcare, ordinary people are often the ones who are least prepared.
The government has introduced auto-enrolment in order to encourage greater private pension saving for retirement and to lessen the impact on state provision. But it’s not just pensions where the majority rely on meagre state benefits, death and disability benefits too are a backstop for many but the reality of actually living on these benefits is very different from what many expect. Employers are being forced to step into pension saving, but they may be encouraged to support other aspects of employee health and financial wellbeing too.
Employees are now looking to their employer for pension saving, they may start to look to their employer for other basic benefits too. This is a culture change where the employer is seen as providing more than just employment.
There are business benefits in building on what auto-enrolment has started
There are clear business benefits for employers in expanding their benefits programme.
Firstly, numerous studies have shown a positive impact on staff retention and acquisition, especially in sectors such as financial services, legal and media industries where employee benefits programmes are commonplace. To recruit the brightest and best, benefits are a must. Even in sectors where benefits are not as common, providing more than just employment has the potential to encourage greater loyalty from employees and could be a differentiator.
Secondly, many benefits provide direct productivity gains for employers as well as mitigating people risks. When your people are your main asset it makes good business sense to invest in their wellbeing.
Disability insurance for example, provides rehabilitation support for employees at an early stage to help them recover more quickly from an illness or injury which is keeping them off work. Virtual GP services provide employees with quicker and more convenient access to a GP, with the consultation conducted via video call from their smartphone. Life insurance provides important financial support to the family, replacing some of the lost income from the employee and allowing the employer to offer meaningful support. Other benefits such as cycle to work schemes and gym discounts can also have a positive impact on the health and wellbeing of employees too.
This is now much easier, and cheaper, than it used to be
The industry I work in is changing dramatically and until recently was almost exclusively serving large companies with the resources to implement employee benefits.
But this is starting to change as employers increasingly shift from acting as a sponsor of staff benefits, to being facilitators, where they provide access to benefits for employees and encourage them to engage. The most likely scenario is the employer paying for a basic level of cover and showing employees how they can top-up their cover to meet their needs.
Online tools are now available that allow employers to provide their people with access to recommended products at reduced group prices, as well as support and education that puts health and financial wellbeing firmly onto an employee’s agenda. The employer can then become the access point to a range of appropriate resources, without paying for all the benefits themselves.
A good place to start
Working in the industry, I would say this, but it is sensible to protect pension savings pre-retirement with life insurance which can provide meaningful financial support in the event of a death when pension pots are small. This sort of cover is also very good value and is one of the cheapest and simplest benefits around.
Starting with simple, foundation benefits which complement the pension, perhaps introduced over time as you periodically review your workplace benefits, alongside access for employees to adapt to their own circumstances, will bring lasting positive benefits to the business.
Auto-enrolment is already compelling many employers to introduce workplace benefits for the first time. Those employers should keep an open mind about the world of employee benefits and explore the simple, cost effective options that are out there and which can provide great value to their people and the business.