View more on these topics

What employers should expect over the next five years

A major feature of our articles is looking into the Jelf Employee Benefits crystal ball to predict changes and trends that may influence the short and medium term shape of UK employee benefits.  By flagging such changes early we aim to provide our followers with the tools to make sensible and informed decisions on their benefits offerings.

There are of course many influencing factors on such trends, but it is undeniable that the pivotal driver of change in recent years has been legislation and initiatives imposed by HM Government.  So the political map is important here, and the last few months has seen significant movement in this space with the return of a majority Conservative government and the Summer Budget statement providing some firm indicators as to the likely direction of travel.  

It is also worth remembering that one of the early acts of the previous coalition government was to impose guaranteed five-year parliamentary terms, so this new course is likely to be maintained until at least 2020.

So, in general terms, what should employers expect over the next five years?

This can be summed up in three points:

  • More employer costs
  • Fewer tax reliefs
  • More employer duties

We appreciate that this is not necessarily what employers (or indeed the benefits industry) wants to hear, but it seems likely that this is the path that recent changes and announcements will lead to.  In the short term it is to be expected that the majority of such changes will focus on pension and workplace savings provision, and it should be remembered that providing some is now a legal requirement on employers (so these increased duties and responsibilities cannot easily be avoided). 

And once the future of workplace savings has been defined, it’s likely that the government will turn their attention to some other benefit areas as well.

So it could be a difficult few years ahead as we all adjust to this new world.

Yet employers should not lose sight of the significant silver-lining to this particular cloud.  A good and relevant employee benefits package should (if regularly and well communicated):

  • Improve staff retention and lower recruitment costs
  • Reduce employee absence
  • Boost employee engagement (and therefore productivity)

And, despite the changes mentioned above, it is likely that benefits will still be significantly more tax efficient for both employers and employees than a corresponding salary payment.

The bottom line is that employers will have little choice other than to follow the lead of legislation in this space until 2020, but the savvy organisation will seek to ensure that the return on such costs is maximised by really good governance and employee communications.

Recommended

UK-Currency-Money-Pounds-Notes-700x450.jpg

Nutmeg attempts to lure ‘dumped’ Brewin clients

Online discretionary fund manager Nutmeg is offering chocolates and three months of free service to clients of rival Brewin Dolphin after it scrapped its wealth management service for 2,000 investors. The Financial Times reports Brewin has removed its bespoke wealth management offering for smaller investors as it reviews its minimum investment levels. Last month Brewin […]

The MM Podcast: Advice review, annuity merger and exit fees

In the latest Money Marketing podcast, head of news Tom Selby and Hargreaves Lansdown head of pensions research Tom McPhail discuss the ramifications of the Government’s advice review. The joint Treasury/FCA review, announced earlier this month, is expected to generate plans to better establish a broad-based financial advice market, create a clearer regulatory environment, and […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment