A closer look at the barriers reshaping benefits strategies

The choice of benefits and how they’re delivered are ongoing challenges for HR and reward leaders and it’s those decisions that shape engagement, retention and wellbeing.

Cost pressures dominate the conversation about employee benefits but they’re not the only challenge HR and reward professionals say they’ll face this year. Broadstone’s survey of UK employers reveals a more complex picture, and it’s one that calls for strategic thinking rather than short-term fixes.

Here’s some of the challenges shaping employee benefits plus some expert advice on how to overcome them.

The challenges ahead: what employers told us

When asked what the biggest employee benefits challenge they expect to face in 2026, 47.3% of employers pointed to cost pressures. That’s no surprise given the impact of higher employer National Insurance (NI) contributions, wage increases and inflation. Budget constraints (14.5%) and health-related benefits (13.6%) were also mentioned as drivers of cost pressure.

But cost isn’t the only concern. Beneath the headline, other issues emerged. These issues may not grab headlines like cost does, but they still matter.

Competitiveness (16.4%) remains a concern for attraction and retention. Benefits are a critical lever in a competitive labour market so keeping packages relevant and compelling is essential.
Engagement and uptake (15.5%) mean benefits aren’t landing with all employees. Even the best benefits fail if employees don’t understand or use them. Poor engagement undermines ROI, and awareness and communication remain persistent barriers.
Personalisation (6.4%) is important because not all employees are alike or need the same benefits. Flexibility and choice can also be a lever to improve engagement and competitiveness.

What this means for employers

These challenges affect more than budgets. As a HR professional, you know that benefits shape your employee experience, influence retention, and impact wellbeing and productivity.

But it also means quick fixes like cutting benefits can backfire, eroding trust and reducing value.

The organisations that act now will come out ahead: clearer on cost, more confident on impact, and better aligned to workforce and organisational needs.

Four steps you can take now

Here are four practical steps you can take to help overcome these challenges:

1. Review your benefits portfolio: Start with a clear picture of what you offer, what employees use, and how they use it. Look for duplication and identify underused benefits. Benchmark your benefits using free tools like the Benefits Barometer. This evidence-based approach helps you make informed decisions rather than reactive cuts.

Regular reviews of providers and options can uncover savings and improve member outcomes. Consider the expertise of an independent employee benefits consultancy. They can provide objective advice and solutions, making sure your benefits package reflects your organisational goals and employee needs.

2. Control costs without cutting value: Consider redesigning your benefits for value, not just cost. For example:

Optimise healthcare plans: Use guided care, digital GP services and targeted excess options to manage private medical insurance (PMI) costs without reducing access.
Focus on prevention: Promote screenings and wellbeing programmes to reduce claims and sickness absence.
Plan for resilience: Align benefits to wellbeing and productivity goals, not just cost containment.
Unlock pension value: Implement salary exchange to reduce employer NI costs and improve employee net pay. Read more about salary exchange and why it still pays to act now.

3. Communicate with purpose: Benefits only work if employees understand and know about them. Move beyond annual reminders and align communications to moments that matter.

Use life-event triggers (such as onboarding, start a family, age milestones), personalised messaging and simple digital journeys to make benefits more relevant. Engagement isn’t a one-off campaign; it’s an ongoing conversation.

4. Leverage technology: Technology can turn complexity into clarity. An employee benefits platform like Flexcel can simplify management, reduce admin, personalise experiences, and provide data-driven insights.

The wider context

The UK employee benefits landscape report gives you the wider context such as market trends, employer priorities and practical recommendations to help you plan for the years ahead.

The decisions you make will shape engagement, retention and wellbeing for years to come. Understanding the bigger picture is the first step to making confident, evidence-based choices.

Ready to transform your benefits strategy? Broadstone can help you tackle these challenges and deliver benefits that truly make a difference.