Reaping the benefits of staff benefits
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Employee benefits aren't just for your workforce. Provide them well and the business will benefit too from a rise in productivity and staff retention. Debbie Lovewell discovers a host of schemes you need to know about Employee bene?ts aren’t just for your workforce. Provide them well and the business will bene?t too from a rise in productivity and staff retention. Debbie Lovewell discovers a host of schemes you need to know about
Simply offering a top-notch salary to attract and retain staff is no longer enough. The employee benefits industry is growing rapidly and, with it, so are employees’ expectations. A good benefits package is now a sign of status in a business like yours and is the key to motivating a top-performing workforce. Read on to find out what the most effective schemes available to you are:
While you cannot prevent employees from becoming ill, healthcare benefits can help them return to work more quickly, reducing absence costs and boosting productivity. These benefits are a valuable recruitment and retention tool, which will increase staff loyalty and earn your business a caring reputation.
PRIVATE MEDICAL INSURANCE (PMI):
• Helps with the costs of private treatment and enables staff to jump hospital waiting lists.
• Most policies do not cover HIV/AIDS and pre-existing medical conditions.
• PMI is also perceived to be the most expensive healthcare benefit. Tobin Coles, sales director of Jelf CorporateHealthcare, estimates that businesses like yours can expect to pay about £700 per person per year.
INCOME PROTECTION (IP):
• Pays an ongoing monthly income to employees that become physically unable to work.
• You should expect to pay somewhere between 1.25% and 1.5% of payroll.
• If an employee uses IP, the cost will rise because you are legally obliged to continue paying for all their benefits plus National Insurance (NI) and any pension contributions.
CRITICAL ILLNESS COVER:
• Pays employees a single tax-free lump sum should they suffer permanent disability or a serious illness.
• Most schemes cover a core list of approved conditions, which can be extended for a further charge.
• Premiums are based on age, gender, health, family history and occupation.
• Once the payment has been made employees are removed from the payroll, making them less of a long-term liability.
HEALTHCARE CASH PLAN:
• Provides tax-free contributions towards the cost of everyday treatments such as prescriptions, dental and sight tests.
• Prices start from £1 per person per week, which is often passed on to employees.
• Only helps to fund, not provide, treatment.
Businesses that offer a good pension scheme also score highly in the recruitment and retention stake. Understanding pensions can be tricky but advice is available from pension consultants and bodies such as the Occupational Pensions Regulatory Authority (OPRA) or the Pensions Management Institute. There are four main types of scheme.
FINAL SALARY SCHEMES:
• Pay employees a pension based on a percentage of their final salary. This is calculated using their basic salary (excluding commission, bonuses or benefits) and depends on their length of service.
• The most attractive type of scheme to employees, but few businesses are now establishing fresh plans.
• Your business takes the financial risk and you will need to provide additional funding if a deficit occurs.
MONEY PURCHASE SCHEMES:
• Money is paid into a fund which is invested on an employee’s behalf. Whatever is in the fund when they retire is used to buy an annuity which provides a regular income for life. Part of the fund can be taken as a tax-free lump sum.
• Employer contributions are fixed.
• Members take the financial risk if stock markets and other investments do not perform.
STAKEHOLDER SCHEMES:
• If you employ five people or more and don’t provide access to an occupational pension, you must provide a stakeholder scheme.
• You are not legally required to contribute to the fund and members take any financial risk.
• Employees who join the scheme must be offered a payroll deduction facility to enable them to make contributions.
• A list of stakeholder providers can be found on OPRA’s website at www.opra.gov.uk
GROUP PERSONAL PENSION SCHEME:
• A cluster of individual pensions, which are built up by each member. You must collect their contributions through your payroll system and pass them onto the pension provider.
• Unless you contribute at least 3% of salary on behalf of employees, you must also offer a stakeholder scheme. To promote the scheme as an attractive benefit, you may have to increase your contribution.
• Typically offered by newer businesses with no previous scheme history.
• Members take the financial risk.
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