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Employers still prioritise benefits despite cost pressures

by Benefits Expert
01/05/2024
Cost management, reduction, investment
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Cost is the number one factor driving decisions around employee benefits and wellbeing strategies in the UK, research has shown.

But in spite of this employers still view employee benefits as critical, with a majority pledging to maintain their existing benefits structures.

These were the key findings from a report published by the Reward & Employee Benefits Association (REBA) and Howden Employee Benefits & Wellbeing, titled ‘Benefits Design Research 2024’. It detailed the results of research with 230 employers who are either professional members of REBA or subscribers. 

Findings showed that while half of employers said they were worried about rising costs, 70 percent said they intend to maintain their current benefits offering.

Almost a third (31 percent) of respondents said they expected to absorb the cost increases, and within this proportion 32 percent said they plan to increase their investment in benefits.

Survey respondents said that securing budget approval would be a key challenge. Eight in 10 employers said it is a barrier to investment, which researchers said highlighted the need for HR, reward and benefits professionals to show the expected return on investment and be able to measure benefits to demonstrate value.

Bigger focus on financial wellbeing

The report also found that 38 percent of those surveyed plan to allocate resources to financial wellbeing in 2024/25, which represents a huge (217 percent) surge from 2023 figures.

Pension investment is also set to soar, with 30 percent reporting they intend to increase their investment in 2024/25. The report said this represents a 233 percent increase from spending in 2023.

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Matthew Gregson, executive director at Howden Employee Benefits and Wellbeing, said: “Despite increasing costs, employers continue to invest in employee benefits, reinforcing their value both to the business and employees. Employers recognise prioritising benefits supports business and HR goals such as improving diversity, equity, and inclusion, attracting talent and retaining employees with key skills.

“However, a pressing business concern is risk mitigation. People risk is a growing issue, particularly when it comes to employee health. Annual insurance cost increases can be considerable and are unlikely to significantly reduce in the years ahead. Therefore, ensuring the workforce remains healthy and productive has never been more important.”

Benefits strategies will continue to evolve in 2024/25 as changes seen in 2023 are expected to continue. This is because employers are facing cost pressures from medical inflation, insurance price rises, increases in national minimum wage and pension burdens, the report said.

The survey also found that 49 percent plan to review current suppliers to remove duplication and streamline spend in 2024/25, while 40 percent plan to increase spend on benefits technology.

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Benefits Unboxed
Benefits Unboxed

The podcast from Benefits Expert, the title for HR, reward and benefits professionals.

Seasoned professionals examine the challenges and innovations in today’s employee benefits, reward and HR sector. Every episode, they will unbox a key issue and unpack what it really means for employers and how they can tackle it.

The regulars are Claire Churchard, editor of Benefits Expert; Carole Goldsmith, HR director at the Royal Horticultural Society, and Steve Herbert, consultant and rewards & benefits veteran.

Benefits Unboxed – Hybrid work: reality versus rhetoric
byBenefits Expert from Definite Article Media

Return-to-office mandates are a topic that’s generating plenty of heat in the media, but how closely do the headlines match workplace reality? 

In this episode, one of a three-part series of 10-minute podcasts, hosts Claire Churchard and Steve Herbert discuss data that shows remote or home working is on the rise.

We look at what this means for HR, from balancing employee flexibility with business needs, to ensuring benefits packages remain fair and accessible. We discuss the pinch points, and the opportunities, in building the new normal of work.

Benefits Unboxed – Hybrid work: reality versus rhetoric
Benefits Unboxed – Hybrid work: reality versus rhetoric
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