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.
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.
