3 financial perks that could help your business to retain and attract great staff

Between January 2020 and October 2023, the number of job vacancies in the UK rose by 156,000.

As reported by the Office for National Statistics (ONS), this influx of employment opportunities could cause a problematic decrease in competition for job hunters. And, as a result, this could create greater recruiting challenges for businesses.

What’s more, employees’ priorities appear to be changing.

According to research from Total Jobs, 41% of people who are searching for a new role would be willing to forego a pay rise in exchange for their most desired benefit.

While salaries are still important – the report reveals that those open to changing jobs expect an average pay rise of 14.8% – workplace benefits are a clear priority for job hunters too.

As a business owner, you may have already felt the effects of the changing recruitment environment. The combination of a wider job market with the cost of living crisis may mean you feel pressured to meet increasing expectations of new and existing employees.

Importantly, offering financial perks in addition to a salary your employees deserve could help to pique the interests of new talent and improve loyalty of current staff. It may be more cost-effective for your company too.

Here are three financial perks to consider.

1. Increased pension contributions

As the effects of high interest and inflation rates have set in for families, pension contributions have been sacrificed, according to research published by the Guardian in September 2023. The report reveals that 1 in 5 Britons have cut pension payments during the cost of living crisis.

What’s more, a study from Aviva found that 10% of UK employees, amounting to around 2.85 million people, have “no idea” if they can retire comfortably.

Of those polled, 79% said they’d like more support from their employer about financially planning a comfortable retirement.

With this in mind, offering above the minimum pension contributions, through a contribution matching or exceeding your team’s payments, could be a very attractive financial perk.

Not only could prospective employees be reassured by your commitment to helping them save for their future, but your existing team could also be more likely to maintain pension contributions too.

What’s more, HMRC treats employer pension contributions as an “allowable expense”. So, by increasing your expenditure in this area you could cut your Corporation Tax bill by up to 25%.

Your business won’t normally pay National Insurance (NI) on pension contributions either, making this financial perk truly beneficial for both your company and your team.

2. A package of financial protection

Since the Covid-19 pandemic put many people’s health at an unprecedented risk, the subject of protection may have been on your employees’ minds more than ever.

As such, offering a package of financial protection as an employee perk could bring huge peace of mind to current and future employees, and their families.

There are several types of financial protection you can offer, as a package or included as a standalone benefit within an employee’s contract. Here are three popular types of protection to consider.

“Death in service” life insurance benefit

“Death in service” is a form of employment-linked life insurance that offers an employee’s family a tax-free lump sum if they pass away while still working for your business.

Having this type of cover may be hugely attractive to your employees. While they would not benefit from this money themselves, they could rest assured that their families would receive tax-free funds upon their death, helping them to cover costs and reduce financial stress in a time of grief.

Critical illness cover

Critical illness insurance operates similarly to a death in service benefit, in that it can provide a tax-free lump sum if an employee is diagnosed with a covered illness. This can include cancer, having a stroke or a heart attack, or a similarly serious health event that prevents them from working.

With Macmillan research showing that, on average, someone in the UK is diagnosed with cancer every 90 seconds, critical illness cover could provide an invaluable layer of security for employees and their families.

Income protection insurance

Income protection insurance is another form of illness cover, usually paid as a portion of the policy holder’s income rather than a lump sum.

Including income protection cover as part of a package of financial perks, or as a standalone benefit, could help you attract talent who wish to shield their income from an adverse health event.

Plus, premiums for some insurance policies are usually tax-deductible for businesses. So, much like pension contributions, offering this financial perk could be hugely beneficial for your company’s finances too.

3. A healthcare cash plan

Finally, a scalable benefit you could consider offering is a healthcare cash plan. Through this scheme, your employees can claim back some of the money they spend on healthcare, including:

Dental appointments
Eye tests
Private medical examinations
Physiotherapy
Counselling
Podiatry

These plans can be worth hundreds, or even thousands, of pounds a year to your employees, and as we mentioned above, you can usually offer different levels of cover to employees with various levels of seniority. These plans typically cover a person’s partner or spouse, too.

With the high cost of living on everyone’s minds, offering money back on essential and non-essential health costs could be an extremely valuable financial perk for employees at all levels.

Get in touch to work with experts who specialise in helping business owners achieve their goals

Managing both your personal and corporate wealth during a cost of living crisis may be stressful – but the good news is, you’re not in it alone.

Working with experienced financial planners can help you make informed decisions that improve the wealth situation of yourself, your business, and your team.

To learn more, email [email protected] or call us on 01625 466360.

Please note

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

Note that life insurance plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future results.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates and tax legislation may change in subsequent Finance Acts.