It’s not all about the salary: five valuable employee benefits
With the New Year in swing, many workers may be considering a new job. While a higher salary may be a good incentive for change, you should look at the whole employee benefit package.
Almost half of UK workers will look for a new job in 2018, while one in five are already actively looking for their next step, according to Investors in People analysis.
Its annual Job Exodus Survey found the most common reasons cited for an employment change are due to poor management and pay.
However, before you jump ship after being offered a more attractive salary elsewhere, it’s important to consider and compare all the benefits offered by your existing and potential employer. You may even be able to negotiate with your current employer.
Sarah Coles, personal finance analyst at Hargreaves Lansdown suggests workers consider these five valuable employee benefits, and how to make the most of them:
1) Pension contributions
The average employer with a defined contribution pension puts in 3.2% of salary, but some pay the minimum required by auto-enrolment of 1%, and some pay as much as 10%. The average employer with a defined benefit pension puts in 16.9% of salary. For someone on £30,000-a-year, the gulf between the minimum DC and the average DB scheme is worth almost £5,000 a year. Check what your current employer offers, so you can compare it to the pension scheme offered by any potential future employer.
If you’re planning a move because you want additional cash in your pocket, then this isn’t going to help, but if you just want to be more rewarded for your efforts, you may be able to squeeze money from your employer by diverting more of your salary into your pension. Around two in three big employers with DC schemes offer some kind of matching deal, where for every extra pound you contribute to your pension, they will increase their contributions.
2) Life cover
Nine out of ten employers offer a payment of several times your salary if you die while in employment (performing contractual duties). Further, more than half pay for income protection which will pay a regular income if you are unable to work for a while.
One in ten people will have a prolonged period of sickness during their career, so it’s important not to underestimate the value of this kind of cover. By the age of 50 you can easily pay £50 a month for income protection and £20 a month for life cover, so if your employer offers it, it could be worth £840 a year to you.
3) Medical insurance
One in five employees have private medical insurance, which would cost an average of just under £1,500 a year to replace. They will pay tax on their cover as a benefit-in-kind, but this is a drop in the ocean compared to the cost of a stand-alone policy.
4) Save as you earn schemes
You can pay a monthly sum into these schemes, and after a period of three or five years, you’ll get a bonus. At that point, you can buy shares in your employer at a fixed price. If the share price has risen during the period you can buy at a significant discount, and if it has fallen, you can simply get your savings back – with the bonus. If your employer offers a scheme like this, and you’re not a member, it may be worth joining and giving yourself the chance of a windfall further down the line.
If you are currently in a scheme, then moving employers means leaving it early, so you will simply get your savings back and lose the chance to buy the shares – so consider what you stand to lose. In some cases a new employer may compensate you for these or other types of share options you may have to forgo.
5) Other benefits on offer
In addition to your core benefits, there are a host of other benefits you may be able to opt for. Tax-free childcare vouchers, tax-efficient computer or bike schemes, season ticket loans, cheaper insurance cover and discounted shopping vouchers could be worth hundreds, or even thousands, of pounds a year.
Coles added: “It’s easy to be drawn in by the headline salary, but take the time to dig a bit further before making any rash decisions. Take someone in a £25,000-a-year job, with a DC pension offering an employer contribution of 10%, life cover, income protection, PMI and childcare vouchers. If they were offered a £30,000 a year job with only a 1% pension contribution and no other benefits, they would actually be financially better off staying put.”