Health and protection benefits funding sees shift towards greater fairness
REBA’s Benefits Design Research 2023 finds that fairness will be a major driver of future benefits decisions which is impacting funding levels for core benefits such as health and protection.
Just over half of survey respondents plan to fill benefits gaps for lower grades; one-quarter plan to reduce the waiting period on joining for benefits; seven in 10 will introduce or increase benefits choice, flexibility or personalisation; while one-fifth will extend benefits availability to employees’ dependents. A further two-thirds either have, or plan to, introduce or extend, benefits to support diversity, such as gender health support and benefits for neurodivergent employees.
Benefits spend
The funding around core benefits such as pensions and group risk insurance looks set to remain stable or will increase. 21% of employers plan to increase funding for pensions, while 40% will increase funding for health and protection benefits (including wellbeing). Just 2% plan to reduce funding for pensions, and just 5% plan to reduce funding for health and protection benefits.
Some of these funding increases could be attributed to inflation. Medical inflation, for example, could reach almost 9% in 2023. This increase may also be related to employers’ desire to level-up benefits, creating a more equitable offering for the entire workforce and potentially increasing claims as a result.
Another factor playing into the shift in benefits design is the reassignment of benefits and benefits budgets – moving funds from areas that are perhaps duplicated or underused to benefits that can add more value or be provided to employee groups that were previously excluded.
A fairer approach
There is also significant movement around introducing ‘new or improved benefits funding for lower grades/employee groups’ – 58% either achieved this or plan to in 2023/24. A further 65% either have or plan to introduce or extend benefits to support diversity, such as gender health support and benefits for neurodivergent employees.
These two elements connect with the DEI agenda and demonstrate the push towards greater fairness in employee benefits. This is further emphasised by the finding that 79% of respondent employers either have or plan to add more choice and flexibility to the benefits package.
The research highlights that the EVP is shifting – 48% of employers expect a high impact on their benefits strategy in 2023 due to new EVP/culture definition – and that is starting to emerge in the benefits design strategy that employers have implemented or are intending to implement.
This article contains extracts from REBA’s Benefits Design Research 2023 – download the report
