Research report 2017
most popular benefits
What are the most popular employee benefits offered?
What are the most commonly offered employee benefits?
The top five benefits offered by employers are a workplace pension, childcare vouchers, cycle to work scheme, private medical insurance and life insurance.
We would expect workplace pension to top the list following the government’s introduction of auto-enrolment. Providing private medical insurance, the next most popular employer-paid benefit, suggests employers are taking an active role and interest in their employees’ health. Fit and healthy workers make for more productive workers, so it’s great to see this reflected in the benefits being offered.
The most common group risk product provided is life insurance, with the financial services and insurance industry being the most likely group of employers to provide it for their staff. This industry also offered critical illness insurance and income protection more commonly than the average. This is perhaps due to better awareness of financial products and a competitive employment market where benefit packages have become commonplace.
Interestingly, income protection is the least popular benefit provided by employers we surveyed, although there are some industry variations. Companies within the information and communications industry are most likely to provide income protection (27%), followed by financial services and insurance (18%) and then wholesale and retail trade (17%). Companies within the arts, entertainment and recreation sector are least likely to offer it (2%).
“Take-up and interest in income protection is very disappointing. Our research suggests this is due to a perception of high cost and lack of awareness about the value of the cover.”
- Lee Lovett, Chief Executive
As well as being the least popular benefit offered by employers, just 9% of employees surveyed said they thought of income protection as a valuable product.
74% of employers surveyed still do not provide life insurance - the most commonly provided group risk benefit
While life insurance is the most commonly provided group risk benefit, 74% of employers surveyed still do not provide it. This is higher among smaller employers, as 85% of those surveyed with less than 25 employees do not provide the cover. For those that don’t offer any group risk benefits, perceptions of a high cost is the main reason. 32% of employers said they suspected these products are too expensive, the most common reason for not providing the cover. 20% said they didn't know enough about the benefits and only 12% said they didn't think these benefits were valuable.
For advisers, this shows that most employers are interested in these products, but there is a pressing need to educate and inform regarding the value and cost of cover.
While cost perception is clearly an issue for many, nearly a quarter (24%) of employers said they had actually looked into the cost of providing income protection, but found it too expensive to provide. As short term products paying benefits for 2, 3, 4 or 5 years become increasingly popular, we’d urge these employers (with the support of their adviser) to reconsider, as the cost is considerably less than traditional products that pay to retirement. Some cover is clearly better than none, especially as all products generally include additional services such as early intervention, rehabilitation support and employee assistance programmes.
most valued benefits
What benefits do employees and employers value most?
What are the most valued benefits?
While the benefits employees value vary by their age and the industry they work in, generally speaking there are few discrepancies between what employees value and what employers think their employees value. This suggests employers are in touch with their employees’ needs.
A workplace pension was voted the most valued benefit by both employers and employees,
followed by private medical insurance. Employees recognise the importance of having life insurance by voting this as their third most valued benefit.
Preferences do differ by industry though. For example, 22% of employees working in construction valued private medical insurance, whereas only 12% of those working in wholesale or retail did. Instead they preferred a retail or leisure discount scheme (24%), which was only valued by 12% of construction workers.
“Benefit preferences vary significantly by industry, reflecting demographics and job demands. Benefit programmes must suit the workforce; a one-size-fits-all will fall short.”
– Chris Morgan, Chief Marketing Officer
Although overall employer perceptions of the most valuable employee benefits largely match with what employees want, there are some differences in specific sectors. Employers in wholesale and retail trade perceive private medical insurance to be a lot more valued than
it is by employees (25% vs 12%) and conversely undervalue retail or leisure discount schemes (15% vs 24%). In manufacturing, employers perceive life insurance to be valued by 13% of employees, yet employees in that sector actually value it more (23%). A disconnect between head office business leaders or managers and shop floor employees could perhaps explain these differences, as could HR and benefit professionals who move across industries.
Either way, businesses must fully appraise the needs of their own workforce before making benefit decisions as spending on unloved benefits will not provide a return for the
There are also notable differences in the most valued benefits by age. Employees aged 16-24 valued a workplace pension and private medical insurance the least of all the age groups, instead rating a retail or leisure discounts scheme and gym memberships more valuable than other age groups did. Despite a low score, a workplace pension still remained the most valued benefit for 16-24 year olds, followed by a retail or leisure discount scheme.
Employees aged 25-34 and 35-44 valued their pension, private medical insurance and life insurance higher than younger employees did.
In fact after a workplace pension, life insurance was the most valued benefit for these age groups, reflecting the typical need for life
cover when buying a property, getting married
or starting a family, which commonly occurs at
23% of employees aged 45-54 and 28% of employees aged 55+ said they most valued private medical insurance after their pension. This compares to only 12% of the 16-24 age group. This is perhaps expected as older
workers tend to be more health conscious.
Overall the benefits employees’ value most
vary by industry type and the age group of the employee, but not by size of the company. This
is understandable as whether small or large, rewarding and looking after staff leads to increased retention for employers.
why buy benefits?
We asked employers why they buy benefits
Why do employers buy benefits for their employees?
28% of employers said the main reason they provide benefits is to reward their staff for their efforts, suggesting they prioritise existing staff over possible new recruits. Attracting new talent (21%) was the fourth highest reason for providing benefits. While economic arguments about attracting and retaining the best staff for the business are of course important, our research shows that employers are more concerned with rewarding their staff and doing the right thing.
“It's helpful to be reminded that the main reason employers buy benefits is to reward their staff. They want to attract and retain but they want to say thanks too.”
– Chris Morgan, Chief Marketing Officer
An employer’s motivation for buying benefits does vary by industry in some cases, although in 9 out of 14 industries surveyed, rewarding staff was still the top reason. In the arts and entertainment sector, employers cited looking after my staff as the top reason (50%), with only 3% saying they buy benefits to attract new talent and 13% to retain existing staff. Attracting talent was the top reason in the information, communication and technology sector (32%), with looking after staff less important (14%), whereas in healthcare the opposite was true as looking after staff was the main reason for 32% of employers and attracting talent was only important for 8%.
talking about benefits
How do employers communicate with their staff?
How are benefits communicated?
Communication results were consistent. A third of employers (32%) claim to communicate benefits to their staff at least once a month; a good level of communication which was confirmed by employees (34%).
However, research showed 28% of employers only communicate with their staff once a year. Poor communication is a potential waste of money as staff lose track of the benefits they are entitled to. This also leads to poor usage of the extra support services offered alongside many products, as most employees are just not aware.
28% of employers
only communicate with
their staff once a year
Small companies also communicate less. Just 17% of micro businesses with 1-5 staff remind monthly about the benefits available, and nearly a quarter (24%) never communicate. This compares with 35% of companies with 250+ staff who communicate monthly and only 3% who never communicate.
Almost half (47%) of employees said their employer communicated with them via email, followed by the company intranet (35%), then verbally by their manager (27%). The least popular way of communication was via workplace social media at 8%, although this is most likely due to low take-up of this tool in businesses.
Perhaps unsurprisingly, companies with five employees or fewer tend to rely on verbal communication from managers (47%), whereas larger companies of 100+ employees more commonly use email (55%) or company intranet (48%), both of which are easy and quick ways to reach a large audience with relevant information.
added value benefits
Group risk products include extra services,
are they valued and are they used?
What additional services are valued the most?
We also asked about the additional services typically included within group risk insurances, how they are communicated and which of these employers and employees value the most.
Early intervention and rehabilitation services found to be the most value added service by both employees and employers
Amongst employers who have group risk insurance, awareness of added value services was good, only 2% said they didn’t know about the extra services provided. Yet employees were not as well informed, with 18% saying that they didn’t know what was provided. Employers reported almost the same frequency of communications as for other benefits, with most communicating either every month (30%) or once a year (31%). Reviewing the effectiveness of these communications should be a priority to encourage more employees to take advantage of these free services.
The most valued service for both groups is early intervention and rehabilitation services (37% employers value it; 31% employees value it) that nearly all insurers provide as part of their group income protection insurance. Contrasting with weak interest in the insurance product itself, this suggests that better promotion and awareness as to the preventative aspect of this product will help provide more value to employers and employees and increase take-up of this important cover.
Employee assistance programmes (EAP) are valued higher by employers (29%) than employees (18%). Employers clearly appreciate the benefit EAPs can offer to their staff and in turn to them in the form of a happier, more productive workforce, but perhaps employees
do not fully understand the services offered by EAPs. Of those employees who had access to
an EAP, half had never used the service and the other half had, including 13% who had used the service a number of times.
Better promotion from insurers, advisers and employers should be a priority to help improve engagement and interest in this service from employees.
Our methodology and a bit about us
In August 2017 we surveyed 1,150 UK employees and 1,001 employers on the types of benefits they receive, offer and value across a variety
of industry sectors and company sizes.
Our latest research looks at the most popular employee benefits provided by UK employers. We explore trends in benefit selection for different company sizes and across different industries. We also examine the benefits which are valued most by employees, how benefits are communicated and why employers buy or don’t buy benefits for their staff. Together, our research provides a comprehensive picture of the UK employee benefits market, ideal for HR and reward professionals and consultants alike.
Who are Ellipse?
We are a group risk insurer. We provide group life, critical illness and income protection insurance for all employers, small, medium and large.
Protecting people is our reason for being. It's what motivates us to challenge and innovate and look for new ways to do this business.
Our market leading online systems provide speed, convenience and efficiency through automation. This makes it easier and cheaper to get more people covered. It also gives our people more time to focus on delivering great service that truly adds value, so you can trust us with your clients.
The right mix of people and technology to deliver smarter group risk insurance.