Employee Benefit Trends 2018
With only a few sleeps until Christmas (excuse the language - I have two daughters under six...) at Populo we have started to look to 2018 to try and identify trends in the employee benefits market.
According to The Office of National Statistics, between August and October 2017 unemployment fell to 4.3%, the lowest level since 1975, whilst at the same time average total pay has increased 2.41% on the year.
Furthermore, The Recruitment and Employment Confederation found that 42% of companies have no capacity to expand without taking on more staff, up from 34% a year ago (as noted in the Telegraph 20/09/17). Therefore, it stands to reason that job vacancies between September and November 2017 were 798,000, 45,000 more than the same period a year earlier, and the highest figure since records began in 2001.
To recap, unemployment is low, wages are rising, increasingly businesses are functioning at capacity and there are more jobs available.
In our view this all means that the employment market is going to be increasingly competitive for companies trying to attract and retain good staff.
Below are the employee benefits with think are on the rise, things employees may expect, and tips to get your business ahead of the game and attract the best people.
We strongly believe that financial wellbeing is going to be the most significant change to employee benefits in 2018.
What is meant by financial wellbeing? There are two main facets:
Firstly, it's a way to support your employees having good financial health and discipline. Apps and websites that enable employees to monitor their income and expenditure, manage their debt, and develop and monitor financial goals are on the up. (Like the Personal Finance Portal we use).
Why is this important? The Money Advice Service reports that one in six adults in the UK, an estimated 8.2 million people, live with debt worries. Financial concerns can leave employees feeling distracted and disengaged and less productive.
Secondly, it is to support your employees with their financial planning. There have been two pretty significant changes in financial planning that are starting to take effect.
The introduction of Auto Enrolment and Pension Freedoms. Auto Enrolment means circa 9,000,000 people are now savings for retirement that previously weren't.
Although there are mandated minimum contributions, they are unlikely to provide sufficient income to an individual when they come to retire. Giving your employees access to a financial adviser will help them define their goals and funding requirements, which can have a transformative effect on their future.
When it comes to retiring it's no longer the case that employees take the annuity offered by the pension provider. The retirement income market place has become more flexible, but more confusing. Choosing the most suitable source of income in retirement can have a significant impact on the income produced and an individual's standard of living.
Retail Distribution Review:
RDR came in to affect on December 31st 2012 and fundamentally changed the services provided by financial advisers, the qualifications they must have, and how they can be remunerated. This lead to a 20% fall in the number of advisers, according to the FCA, and the unintended consequence of the 'advice gap'.
According to AXA Wealth, there is only one adviser for every 2,700 people in the UK who require help with their finances. This compares to ratios of one adviser per 1,400 people in Australia and one per 156 savers in Hong Kong.
With the removal of commission, advisers were required to charge explicit fees for specific services. Back in October 2015, the Citizens Advice Bureau charity estimated that 5.4 million Brits are willing to pay for advice but not at current prices, while 14.5 million are unable to pay for it altogether. The figures suggest that many UK consumers are making big financial decisions alone.
As a result, to support employees, employers are bringing in financial advisers to offer clinics in the workplace and full financial advice where appropriate.
Whether your staff need help getting to grips with debt, or to plan for their future, getting them the appropriate tools and advice will put them in a better position, potentially relieving stress and increasing wellbeing.
This is a broader area that can include many things, but here are some of the highlights:
This can be anything from 'Telecommuting' (working from home via the internet, email and telephone) to the compressed week. For example, compressing a 76 hour working fortnight into 9 days and taking the 10th off.
Professional and Career Development:
A well-educated workforce is one of an employer's most valuable assets. Thanks to the rise in online learning, continuing education has never been easier or more accessible. Nearly 1 in 4 workers would be likely or very likely to pursue online education if it were offered as a voluntary benefit, according to Harris Interactive.
Meditation and Mindfulness:
Meditation and mindfulness training helps discover a natural state of mind in which a person is focused, present and aware. People who are more skilled at working with their minds and mental states perform better at work. This benefits everyone: themselves, their colleagues, their clients and their organisations. At present very few employers offer programs to help reduce stress but we feel the number is set to increase.
Whether it be gym membership or wearables like FitBits, we expect that supporting employees to live a healthier lifestyle will become more prevalent. 'Healthly body, healthy mind' is widely accepted, so supporting your staff with their physical health means there's more chance of them having a more productive mind at work.
The vast majority of brokers still work on a commission basis, which means the larger the premium, the more they get paid. At Populo we believe in clear and transparent fee based advice and we think (hope) more advisers will follow.
If you are purchasing benefits on a fixed fee basis you can be confident that the adviser's sole motivation is to source the most suitable scheme for your company. This approach, to some extent, mirrors the advances that were made as a result of RDR (mentioned above), and pushes the industry to be more professional.
Here are some other employee benefits we have come across but we don't anticipate being as prevalent:
Identity Theft Cover. Some employers are offering this as either a benefit or a voluntary benefit, with several major data breaches this year this kind of cover can reimburse the costs associated with clearing up ID theft issues.
Pet Insurance. Apparently 1 in 3 Fortune 500 companies offer there employees pet insurance as a voluntary benefit to help ensure pets get the care they need and so their owners can come to work.
It's hard to know what 2018 will bring and what impact Brexit negotiations will have on the economy and businesses.
Regardless of what it brings, win-win scenarios for businesses and their employees will be a driver for more comprehensive workplace benefits.
"There is now less of a focus on the financial impact represented by traditional ROI models and more of a focus on workforce engagement, productivity and overall business performance." says Jessica Grosmeier, Ph.D., vice president of research for HERO (Health Enhancement Research Organisation). "In fact, a 2016 research study from HERO found that there is a correlation between companies that invest in comprehensive approaches to employee well-being and those that report strong corporate stock performances. The conversation has thus shifted from a focus on ROI alone to a broader value proposition that includes both tangible and intangible benefits of improved worker health and well-being."
Merry Christmas from us all at Populo.
If you would like to discuss employee benefits and investigate how they can be integrated in to your business, please get in touch.