Many businesses are still trying to decide how to fund the dramatic employers’ NI increases announced in Rachel Reeves’ Budget.
From next April employers will pay NI at 15% on salaries above £5,000 – up from 13.8% on salaries above £9,100.
And the Office for Budget Responsibility (OBR) has calculated that, because bosses will cut back on pay rises and hiring, three quarters of the impact will be felt by employees.
But it’s during times like these that a specialist intermediary like Chase de Vere can really prove its worth.
We can provide totally independent full market reviews and consulting services which may prevent your employees being adversely impacted at all.
Indeed, we have been proactively contacting clients to share what we can do to support them with the increased cost burden.
We can suggest employee benefits strategies that can realise savings at least equivalent to the 1.2% NI increase – and in some cases far greater.
Salary exchange
One approach we may recommend, if employers are not already using it, is to implement salary exchange for the company pension scheme.
By employees agreeing to give up entitlement to a proportion of salary in exchange for pension contributions, not only do they enjoy a reduction in tax and NI contributions but the company itself also normally saves from lower employers’ NI contributions.
And there can be further benefits. For example, complementing salary exchange with a full communications package, including pensions surgeries, can significantly boost employee pension contribution levels.
Since the Budget NI announcement we’ve found that some clients who had previously considered, but not actually proceeded with salary exchange, are now getting much more urgent about it.
Additionally, the same salary exchange format can be used to good effect to produce savings in conjunction with electric cars, workplace nurseries or Cycle to Work schemes.
Healthcare benefits
Another way in which employers can save money is by slashing absenteeism and presenteeism costs.
At a time when the NHS is on its knees, introducing a private medical insurance (PMI) scheme can be a good way of doing this.
A good scheme can enable employees to jump the NHS queue to receive private inpatient or outpatient treatment at a time that fits in with their workloads and those of their colleagues.
Income protection, which pays a regular income to employees off work with long-term health problems, can also play an important role because it includes valuable rehabilitation facilities to help employees back to work.
And both products now include useful added-value features like virtual GP services, mental health support and employee assistance programmes (EAPs).
Such health insurance schemes are available in many different formats but we can discuss which ones are most suited to your particular workforce and budget.
Other cost saving strategies
Indeed, we can provide a review of your entire employee benefits range, including any existing PMI or income protection schemes you may have.
In such a rapidly changing marketplace providers that were the right choice only a couple of years ago may no longer be the most affordable or appropriate.
Even if they remain competitive, it could be time to consider unlocking savings by switching to a lower-cost product structure.
Significant premium reductions can, for example, be realised by trading down to PMI with limited or no outpatient cover or to income protection that pays out for a limited term of two to five years rather than until retirement age.
Other ways in which we may be able to help you save money include cutting out overlap between added-value features on products, avoiding regulatory fines by arranging pensions governance meetings to ensure compliance, and creating communications strategies so that increased employee uptake maximises value on benefit spend.
Although we routinely address such issues in annual reviews, we don’t always get the level of client engagement we would like during these. But, when recontacting employers about the NI increases, we are finding they are often interested in more in-depth discussions.
If you would like to find out more about how Chase de Vere can help you offset the cost of the new employers’ NI increases then please don’t hesitate to contact us on 0345 609 2002.
The information contained within this article is for guidance only and does not constitute financial advice