FEATURE
PENSIONS & EMPLOYEE BENEFITS Employee
benefits
There are a number of reasons for business owners to offer their employees a benefit package. Business Network explores some of the different types of benefits on offer and how they can profit the company.
For employees, a benefits package can help plan for old age or unexpected events, such as injuries or illness. For employers, it can help ensure their workforce remains happy and committed, while also serving as an attractive recruitment tool. However, every workforce is different, so when creating a benefits package it is important to consider the demographic of the workforce and make sure the benefits on offer really suit the business.
PENSIONS A pension will allow employees to save for retirement through contributions deducted from their wages. There are several types of pension available, the most common is a defined contribution pension, in which the employee and the employer each put a set amount of money into the pension account each year. Upon retirement, the employee has a pot of cash which can be used as annual income. The law on providing workplace pensions has recently changed. Under the Pensions Act 2008, employers must enrol eligible employees into a scheme and contribute towards it by 2018.
SAVINGS Savings packages can come in the form of share schemes or workplace ISAs. Share schemes usually involve employees being given free shares in the company and can be limited to certain levels of employee (e.g. upper management) or require a certain number of years in employment at the company. A workplace ISA allows employees to contribute to stocks and shares direct from their salary. With tax-free returns, employees can enjoy such extra cost savings as lower management fees and fund switching free of charge.
‘Private medical insurance (PMI) pays for the cost of private treatment. However, it does not cover every medical condition, so employees will need to check the policy details carefully’
32 business network March 2017
Childcare vouchers can be used to pay for preschool or nursery care
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