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What effect will Covid-19 have on the employee benefits market?
Covid-19 has had a huge impact on all aspects of corporate life, from where and when people work, to the rapid adoption of new technology and digital communications. Companies across all sectors have had to rethink the way they do business.
Covid-19 has also caused a fundamental shift in how people think about wellbeing and its impact on physical and mental health.
The pandemic has made many people reassess what is important for them, and this is likely to have a profound impact on the corporate benefits market.
Prior to Covid-19 employees may have focused solely on the financial ‘bottom line’ of a job – its salary, bonus scheme, and perhaps the holiday entitlement. Now I think employees will be looking at the wider benefits available. Is it a company that would offer them flexibility and support in a period of crisis? Employers will need to be able to demonstrate that they take their duty of care towards employees seriously.
Many businesses will be looking to streamline costs in a tough economic environment. Why should corporate advisers be encouraging clients to prioritise employee benefits at present?
There is no doubt many businesses will be looking to reduce costs, not add to them in the current climate. But the recruitment and retention of staff will still be essential for many of these companies. Given the underlying economic conditions, firms may not be able to make generous pay rises this year. In some cases, even inflation-linked pay rises will be out of the question. But a benefits package, delivered via a platform such as WorkLife, starts from just £60 per employee per year. For employers whose budgets are stretched this can be a cost effective and flexible option for them to improve their overall benefits proposition and reward staff.
Where do you see future growth in the employee benefits market?
There is a huge opportunity at present for advisers to extend into the SME market. This is a largely untapped market with real potential for growth over the next five years.
Until now, the benefits market has been skewed towards larger corporates. But this is changing with the development of simple low-cost tech solutions that offer a real opportunity, for employers, providers and advisers to help the majority of people in the UK who work for smaller companies to get similar benefits to those in larger corporations.
Do you see financial advice becoming a key employee benefit?
Access to financial advice is an essential part of an employee’s overall wellbeing — as we know financial stress and difficulty can cause stress and anxiety and mental health problems.
Most employees — whether they work for larger or smaller companies — do not have any access to financial advice through the workplace. We want to change that.
This isn’t about providing complex tax planning solutions to directors or high-net-worth individuals.
This is about giving employees advice about what debt they should repay first, ensuring they have appropriate protection in place for their family, and building emergency savings. Access to advice can help people build stronger financial foundations.
We don’t see any inherent conflict of interest for corporate advisers recommending a platform that offers access to these services. Some firms may offer wealth management financial advice services to directors, but this is a very different demographic.
The industry has a responsibility to help people manage their money better and signpost where they can access this kind of advice. For employers, we see this as very much part of their corporate responsibility, helping support employee wellbeing.
What sort of benefits might be offered in future via platforms such as WorkLife? How will these propositions develop?
Across the industry there is more of a focus these days on corporate responsibility and purpose, whether it be considering the environmental impact of business activities or the duty of care to employees. This will be seen as increasingly important, even for smaller and medium-sized firms. The question is, how can platforms like ours support this.
We are planning a number of initiatives which should help deliver social and environmental change. For example, we are looking at an arrangement that will allow employees to purchase an electric vehicle through a salary sacrifice scheme, and we are also looking at options for employees to make charitable donations from their salary.
There are a number of options which will help employers demonstrate to employees that they care about the environment and broader social issues, and are making a concrete difference. We expect there to be more of these options as these propositions mature and change.
TO VIEW A PDF OF THE WORKLIFE FROM OPENMONEY ROUND TABLE ON SIGNPOSTING, CLICK HERE
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