UK companies are shaking up their benefits strategies as rising costs, economic uncertainty and fierce competition for talent put pressure on budgets, according to WTW’s latest biennial Benefits Trends Survey.
The survey revealed that nearly two-thirds (64 percent) of employers now cite rising benefit costs as their top concern, up sharply from 57 percent in 2023. Other key drivers include the battle for talent (59 percent), growing demand for a better employee experience (44 percent) and the impact of the cost of living (37 percent).
In response, employers are becoming more strategic by focusing on smarter spending, personalisation, and improved employee support tools.
“After a long period of high benefits inflation and in the face of a possibly weakening economy, employers are taking a step back and looking to focus on what drives real value for employees and the business,” said Andy Leighton, director, health and benefits at WTW. “That means targeting support and spending on the benefits that matter most, enabling personalisation and helping employees make better decisions.”
Rising healthcare costs remain a major challenge, with 40 percent of employers struggling to implement strategy in this area. Wellbeing programmes (28 percent) and retirement benefits (23 percent) also face headwinds, respondents said.
To combat these pressures, 67 percent of employers want to expand employee benefits choice in the next three years. In addition, 60 percent are adopting navigation tools to guide benefit use, 57 percent plan to reallocate or realign benefit spend, and 52 percent will seek better-value vendors for their health, pension and risk benefits.
Over the next three years, employers also plan to focus on supporting employee mental health, financial wellbeing, and family support. Many employers are turning to targeted communications, behavioural nudges and performance analytics to help shape better outcomes.
“Organisations are facing more pressure than ever to deliver the right benefits strategy,” said Leighton. “Finding innovative solutions for old and new challenges and reshaping benefits to signal purpose and values is a good start. There is still a long way to go to address these pressure points, but employers seem to be going in the right direction to focus on what matters most to their employees.”
