Ten money saving tips: Examine small print to get the most from employee benefits packages
IT GOES without saying that the amount we’re paid is an important aspect of the package we get from employers – but it’s not the only one.
With many people suffering pay freezes and pay cuts, it’s a good time to look at what value you can get from other workplace benefits – you may be surprised at what’s on offer. Lorna Ashworth, managing director at pay and rewards specialists Ashworth Black, offers her top tips on getting the most from your employee benefits package.
1 Do your homework
Make time to read the contract of employment and staff handbook to understand what benefits your employer offers and how to qualify. Many employers produce a total reward statement to advise employees as to the value of the “whole” remuneration package.
Many employers offer their staff health cash plans, but few employees actually read and understand what can be claimed for and reimbursed under the scheme.
2 What’s on offer?
The most popular benefits fluctuate according to the stage in an employee’s career and what they value at that time. However, the most commonly provided benefits from an employer include additional leave; enhanced sick pay and maternity pay; pension; childcare vouchers; flexi time; health benefits (such as private health insurance and gym membership); and company cars/company car allowances.
3 Added value
Employers are bound by legal requirements to pay statutory sick pay and statutory maternity pay as long as employees meet the eligibility criteria. However, many employers offer an enhanced benefit package, eg enhanced sick pay and enhanced maternity pay, which can result in significant benefits over and above the statutory minimum.
4 Pick and mix
Some employers offer flexible benefit packages – if your organisation doesn’t, why not suggest it as an option? These schemes enable employees to choose the benefits that suit their lifestyle, giving the opportunity to select benefits up to a pre-set value or by paying on a contributory basis. These include childcare or shopping vouchers and benefits such as flexible working for all staff, health screening, buy a bike schemes, fruit or water at work etc.
5 Time it right
Often benefits policies are set on an annual basis, so where there is a choice, make sure employees consider carefully before choosing the desired benefits as they won’t be able to change them until the scheme comes up for renewal next year.
6 The sting in the tail
Be aware that certain benefits, for example a company car, bonus payment or interest-free loans, will attract tax and will need to be declared individually on the P11D form.
7 Company discounts
Many employers have bulk buying power which enables them to purchase benefits such as critical health insurance, private medical insurance, supermarket vouchers and so on. Significant savings can be made by employees by buying these benefits through the employer, rather than the employee buying them directly from the companies themselves.
8 Savings boost
From October 2012 employers will be required automatically to enrol all eligible employees into a pension scheme. The largest companies start first, with the remainder phased in over the coming six years.
All employees should consider if they want to be auto-enrolled or are indeed eligible. Those under 22 or earning less than £7,475 a year are not eligible for the scheme. Independent financial advice is available and recommended for further advice around pensions.
9 How much is it worth?
If you’re looking for a new job, don’t be taken in by the headline salary alone. When making a career move, make sure the grass really is greener on the other side. Generally, people will move job for a 10 per cent pay increase, but if your current employer offers a final salary pension and your new one doesn’t, then the benefit of the salary hike is quickly outweighed by the loss you’d make from losing the monthly contributions into your pension.
Many employees only focus on their take-home pay or any bonus and don’t appreciate that their enhanced maternity pay, pension scheme, training and development and annual leave beyond the statutory minimum are not “a given”, and therefore they don’t fully appreciate their value until it’s too late.
10 Get involved
Finally, use opportunities within your work to feedback and suggest options for your employee benefits package. Formal appraisal systems offer employees the opportunity to suggest ways in which their employers can do more to support the employee.
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