Feature
Pensions & Employee Benefits
Workplace Benefits
There are a number of reasons for business owners to offer their employees a benefit package. Chamberlink 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 suits 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 in 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 an 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.
Health cover 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 to see what can be covered, because ultimately it is the employers decision to choose what pre-existing conditions can be covered by the plan. While PMI will pay for the cost of treatment, it will not supplement an employee’s income if they need to take time off from work. Corporate dental insurance covers routine NHS examinations and contributes to the
cost of more expensive dental work. Optical insurance helps pay for eye tests, glasses or contact lenses, and will often pay out a lump sum in the event of accidental and permanent loss of sight. With certain plans, dental and optical insurance can be extended to cover the employee’s family.
Other Benefits Companies can offer a range of other benefits to suit their employees’ needs. Childcare vouchers can be used to pay for preschool/nursery, a nanny or a child
minder up until the child turns 15. These vouchers are taken out of an employee’s salary (before tax and National Insurance) though a ‘salary sacrifice’ scheme – in this case, a percentage of the salary is paid in vouchers instead. The exact amount depends on how much tax the employee pays. A car allowance gives an employee an extra payment that allows them to buy a car for
work. Some employers may also offer a mileage allowance, allowing the employer a certain amount for each mile that is driven on company business, or provide a company car. Other benefits include free or discounted membership at a local gym – which will
also encourage healthy lifestyles among employees – interest free travel loans to cover the cost of an annual or season travel card, company shares – which allow employees to benefit from the company’s successes – and flexible work hours, which are particularly attractive to employees with families.
52 CHAMBERLINK March 2017
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