The Times recently reported that more than half of UK professionals looking for work are now seeking employers offering a strong benefits package. This rises to two-thirds among candidates under 35.

Post-pandemic, employees increasingly expect additional perks, like flexibility and a work-life balance that supports their mental health.

Beyond the salary a role pays, other important benefits might include a workplace pension and a salary sacrifice scheme. Or it might include a gym membership, private medical insurance, or life insurance.

These can provide a financial uplift for employees and employers, as well as having mental and physical health benefits.

Keep reading to find out more about workplace benefits and how to make the most of them.

Workplace benefits vary across businesses

Alongside the salary you pay, you’ll likely provide paid annual leave and a workplace pension. These alone, though, might not be enough to retain or attract top talent, especially in the current job market.

A report published by the Independent back in 2023 found that 61% of UK workers were more likely to apply for a job that offered health perks like insurance, cashback plans, or counselling.

Other perks could include days off for your employees’ birthdays or to prepare for a wedding, on-site facilities like gyms, or an expenses-paid Christmas party each year.

Benefits such as these can improve staff morale, potentially lower absenteeism, and even increase productivity.

A competitive workplace pension, alongside a salary exchange scheme, can have significant financial benefits

For employees

Older workplace pension schemes often have a limited fund choice, lacking sustainable funds, for example, and are unlikely to have online access via portals. This might have dampened employee engagement.

Switching to a newer scheme could save money on fees and offer employees the chance to align their money with their values.

Add salary exchange into the mix, and your staff could quickly re-engage with their pension.

Salary exchange is an agreement to reduce a member of staff’s pay in return for a (usually) non-cash benefit, such as childcare vouchers, health screening or workplace pension contributions.

By decreasing their gross pay, employees pay less National Insurance (and possibly Income Tax too) and will likely see their take-home pay rise.

For employers

Switching your workplace pension scheme and adopting salary exchange doesn’t just benefit your employees. Under salary exchange, your overall staff earnings effectively decrease.

Your company National Insurance contributions (NICs) are based on your wage bill, so offering salary sacrifice across the company – and especially among your highest earners – means you’ll save as much as possible.

It’s important to remember that managing a salary exchange scheme requires some pension expertise, so you might not seek out professional help. The benefits, though, could be huge.

Even the non-financial benefits of staff perks can help your business

Employee benefits like physical and mental health support and higher take-home pay through salary exchange can aid staff morale.

Numerous studies, including those by Oxford University and Harvard University, suggest that happy staff are more productive, with knock-ons for sales, efficiency, and even accuracy.

Happy staff are generally also less likely to require time off. An FTAdviser report back in February 2024 found that illness cost UK businesses £138 billion in 2023. The physical health support of discounted gym membership and screenings, alongside mental health support through retained counsellors, say, should help to support your staff’s wellbeing and encourage them to open up.

Some salary exchange myths persist, so clear communication is key if you choose to adopt a scheme

Asking staff to exchange or “sacrifice” part of their salary can be a hard sell. But it’s important to be clear about the benefits and the fact that their take-home pay will likely rise.

This is true across the salary range, so while targeting high-earners might garner the biggest savings, morale boosts might be felt more strongly at the lower end of your pay scale.

It’s also important to address perceived downsides, like the damage to future borrowing prospects and the loss of means-tested benefits. Historically, lowering your salary might have led to increased difficulty securing a loan for a mortgage, say. Most lenders, though, are now fully aware of salary exchange and will factor it into their calculations.

Entitlement to state benefits like Statutory Maternity Pay could be affected, but only in cases where the salary exchange takes your employees below the level at which they pay NI.

Get in touch

If you need help deciding if a salary exchange scheme, or any other staff benefit, is right for your business, get in touch. Email info@thepensionplanner.co.uk or call 0800 0787 182.

Please note:

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

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 performance. 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.

Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation, and regulations, which are subject to change in the future.

Workplace pensions are regulated by The Pensions Regulator.