Increasing fears of a recession, rising living costs, growing NHS waiting lists and a shortage of skilled workers will all have an impact on the health and group risk sector this year, but employers will have the opportunity to support workers through improved benefits say experts.
The fierce competition for talent will increase the need for improved benefits offerings, with experts suggesting firms should use wellbeing support to address workforce difficulties and cater to different generational needs.
Towergate Health & Protection CEO Iain Laws argues that there is a cap on the amount of wage increases that may be provided, but with careful use of health and wellness benefits, employers can ensure a solid offering to current and prospective employees, whose expectations of employer support will only rise.
Laws says: “There is a limit to the salary increases that can be offered but clever use of health and wellbeing support can help to ensure a strong offering to existing and new employees whose expectations of employer support will continue to increase.
“Companies will be more likely to use wellbeing support to differentiate themselves. Benefits will become more tailored, and more advice led, de-risking the business by providing preventative care, which can reduce sickness absence.”
According to Laws, the ‘great resignation’ may start to reverse as a result of the rising cost of living and declining pension incomes caused by the global and UK financial crises, thus benefits will need to be age-appropriate and adapted.
He adds: “People will return to employment not only for the salary but also for the benefits and wellbeing support. The rate of retirement is likely to slow, and some are likely to leave retirement and return to work.
“Employers will need to become more agile in their approach and commitment to non-financial benefits. They will have to be prepared to tailor their provision to offer the right support, to the right employees, in order to keep the business buoyant and resilient, and they’ll need expert help to guide them to the right solutions at the best value.”
He argues that choosing and providing benefits and wellbeing support will depend more on an awareness of the various worker groups. In order to provide the best support, employers must consider the various needs of those generations. For instance, Laws notes that millennials are more interested in support for nutrition and fitness, but generation X is often more concerned with quick access to therapy.
Laws also says that risk profiling will increase in frequency and significance across employee groups’ health and wellbeing.
He says: “This is the key to being able to offer appropriately tailored support. Just as health and safety risks can be assessed and mitigated, so can health and wellbeing risks. Risk profiling the workforce will allow a more tactical approach and a company-aligned strategy.”
Meanwhile, the NHS is still having trouble with long waiting lists, and companies, therefore, need to work on filling the gap Laws says.
Laws notes: “The NHS is struggling, and employers may need to plug the gap if they want employees to be able to stay healthy and at work. There will be budget constraints for employers and all will be looking to get more bang for their buck with creative use of private medical insurance, cash plans, employee assistance programmes and a mix of offerings to employees.”
RedArc managing director Christine Husbands acknowledges that an overburdened NHS is causing later diagnoses of serious illnesses and a spike in mental health issues, both of which are projected to persist this year. But Husbands says that employers have a chance to step in and offer financial, physical, and mental health support as many workers want to cut back on what may be viewed as unnecessary financial commitments like insurance and health benefits.
Husbands adds that firms should focus on quality not quantity and that those who just provide technical or light-touch solutions will probably not be able to provide the comprehensive support needed when staff members genuinely need it.
Small firms this year will place a high priority on helping employees cope with the cost of living issue, ensuring access to healthcare services, and ensuring employee health and wellbeing, according to Howden Employee Benefits & Wellbeing divisional director Mark Fosh.
Fosh says: “2023 will bring some challenges for small businesses who will need to balance the rising costs of running their business with the need to retain talent and keep employees engaged. Financially, many businesses can’t afford to offer pay rises in line with inflation, however, there are other ways to support employees through this crisis.”
“With the NHS and GP services facing unprecedented pressure, offering access to healthcare services is going to be hugely valuable, as will be supporting employees with their wellbeing and health in general.”
Fosh suggests introducing a salary exchange pension scheme saying: “Employees and employers can save money on National Insurance (NI) contributions and avoid the need for higher rate tax payers to claim higher rate tax relief. Some employers are choosing to redirect their National Insurance savings to boost employees’ pension pots or to fund additional employee benefits.
Fosh also emphasises the need to make healthcare more accessible. He says: “Widespread reports about the NHS being in crisis and waiting times at an all-time high are likely to be a cause for concern for many and particularly for employees waiting for diagnosis or treatment, which may lead to them taking time off work.
“This year, we expect more SMEs to introduce healthcare benefits. This may be extending existing healthcare benefits to more or all staff or introducing benefits such as private medical insurance (PMI), health cash plans, dental cover and virtual GP services.”
Focusing on group risk, Grid spokesperson Katherine Moxham expects that employers and employees will value group risk benefits more than other employee benefits over the course of the upcoming year. Both will be more conscious than ever of the need for financial support in the event of death, serious illness, or accident she says.
She notes: “The pandemic’s wider impact on health is thought to be an important factor in increased long-term sickness, as are long-term chronic or progressive conditions, musculoskeletal issues and mental illness.
“Many employees will be waiting for diagnosis or treatment but unable to access support in a timely way. The availability of support within group risk benefits can mean that employees will be financially supported if they do need to wait for treatment and can also access support to prevent their condition from worsening or to manage symptoms during the wait.”
According to Moxham, employers will have a greater responsibility to make sure that everyone can benefit from working as the government aims to close the disability employment gap by increasing the number of disabled people of all ages in employment.
Moxham says: “Many of those out of the workforce because of long-term sickness are more mature employees, partially reflecting how the prevalence of disability and chronic health conditions increases with age.”
Additionally, Moxham anticipates that employees will make better use of the preventative support provided to them as part of group risk benefits because it is becoming more extensive and well-known. This is due to the fact that staff members will have easier access to the kinds of support that cater to their specific health issues.
Swiss Re technical director Ron Wheatcroft highlights the growth in the non-pension group life covers. The government announced that the lifetime allowance for pensions which includes lump sum payments being made through death in service pension arrangement will be frozen until 2026 and was subsequently extended up until 2028 in the autumn statement.
He says that members of occupational pension schemes are likely to find that their total benefits are impacted by the pensions lifetime allowance.
Wheatcroft says: “We have already seen a trend over the past few years of moving death in service covers out of pension arrangements into life insurance policies. I would expect that trend to continue and the 2028 extension might encourage people to look at it sooner. I expect to see more death in services cover being arranged outside of pensions.”