New Model Reward Research: Salary sacrifice will cause 6.8% reduction in pay budgets by 2021

The allocation of reward could shift slightly by 2021 due to salary sacrifice, according to New Model Reward research 2017, a new research report published by REBA in association with JLT Employee Benefits.

The research suggests that the average proportion of the reward budget spent on base pay is expected to drop by 6.8% (that is 5 percentage points), down from 73% to 68% by 2021, whilst the amount spent on employee benefits rises by 60% (that is three percentage points) from 5% to 8%, according to the study.

The expected increase in benefits spend at the expense of base pay could be a result of the growing trend towards offering benefits through a salary sacrifice arrangement, where employees agree to give up a portion of their gross salary in exchange for an alternative benefit, such as a low emissions car or extra pensions savings.

“Although we have seen salary sacrifice removed from a myriad of benefits, it is still in place for big ticket items such as pensions contributions so will have a significant impact over the coming years,” said Debi O’Donovan, director at REBA.

Download the full 46-page PDF report here: New Model Reward research 2017. REBA members access the research for free.

For further in-depth discussion of this topic with senior HR and reward professionals, sign up for REBA's Reward Leaders' Forum on 27 April 2017. REBA Members can attend for free.