New Study Shows UK Employers Continue to Prioritise Employee Benefits Despite Intense Cost Pressures

In this iPMI Global, Private Medical Insurance In Focus article, leading private medical insurance analyst, Ian Youngman, looks at news from the UK, that employers continue to prioritise employee benefits, even though costs are a big concern.

• A new research report, ‘Benefits Design Research 2024’ from Howden Employee Benefits & Wellbeing and the Reward & Employee Benefits Association (REBA) reveals that cost is the number one factor driving decisions around employee benefits and wellbeing strategies in UK businesses.
• Yet, despite escalating concerns regarding costs, employers still place significant importance on employee benefits, with a majority vowing to maintain their existing benefits structures.
• The research, conducted amongst REBA members and subscribers representing 1.5 million employees*, explores the impact of internal and external pressures on benefits and wellbeing strategies and design over the past year and key trends emerged.
• Despite half of employers worrying about rising costs, a substantial 70% intend to maintain their current benefits offering.
• Notably, among the confident third (31%) who anticipate absorbing cost increases, 32% intend to increase their investment in benefits.
• Despite increasing costs, employers continue to invest in employee benefits, reinforcing their value both to the business and employees. 
• Employers recognise prioritising benefits supports business and HR goals such as improving diversity, equity, and inclusion, attracting talent and retaining employees with key skills.
• People risk is a growing issue, particularly when it comes to employee health.
• Annual insurance cost increases can be considerable and are unlikely to significantly reduce in the years ahead. Therefore, ensuring the workforce remains healthy and productive has never been more important.”
• Benefit strategies are evolving with adjustments to spending seen in 2023 continuing in 2024/25, as employers adapt to cost pressures from medical inflation and insurance price rises.
• To control costs 49% plan to review current suppliers to remove duplication and streamline spend in 2024/25
• 40% plan to increase spend on benefits technology
• A third of employers will increase investment in healthcare benefits, as well as spending on mental wellbeing and enhancing the pension offering.
• These are often complex and costly areas, highlighting the seriousness with which employers are taking benefits, despite the tough economic environment.
• The top three areas earmarked by employers for improvement this year include communication of benefits (54%); financial wellbeing (47%) and benefits technology (45%).
• Companies must prioritise measuring the impact of benefits to demonstrate value and secure budget.
• Significant numbers are failing to measure the impact of their benefits on key strategic business objectives, such as employee absenteeism; diversity, equity, and Inclusion initiatives; employee wellbeing; retaining and recruiting employees, and employee engagement.
• Despite increasing costs, employers continue to invest in employee benefits, reinforcing their value both to the business and employees.  
• However, moving forward companies will need to run their programmes more effectively, benchmarking their existing benefits, using data-driven insights to inform their strategies and ensure they measure the value of their benefits, and manage their stakeholders well.
• Businesses will also need to make better use of technology and improve benefits communications to drive value and to measure and demonstrate the value of their benefits programmes to secure support and ensure their aspirations become a reality.

Howden recommends employers take these actions to improve their future benefits strategies and programme design:

• Baseline their current benefits programme.
• Understand what to measure and start measuring it.
• Get a better handle of spending and forecasting of costs.
• Keep pace with the scale of transformation happening in reward.
• Create an actionable plan.

About the Author

Ian Youngman is an independent writer and researcher specialising in insurance. He writes regularly for a variety of magazines, newsletters, and on-line services. He publishes a range of market reports, and undertakes research for companies. To read his latest report, International Health Insurance 2023, please click here, or visit the REPORTS section of iPMI Global.