Salary Sacrifice: Making employee benefits cost-neutral
7 November 2023
With 50% of employers planning to increase spend on financial wellbeing in place of offering wage increases and cost-of-living payments, it’s never been more important to make employee benefits sustainable. Salary sacrifice solutions can help to make employee benefits cost-neutral, freeing up the budget to utilise in other business areas. Read on to discover the financial wellbeing trends we expect in 2024 and how you can embed them within your business.
The Rewards and Employee Benefits Association (REBA) has recently published their Financial Wellbeing Research for 2023.
"Sustainability – both in terms of the long-term viability of a business and a focus on environmental, social and governance (ESG) factors – will affect financial wellbeing in the future." REBA
The report shows that 42% of their respondents issued pay increases in line with inflation over the previous two years. 42% also paid one-off cost-of-living payments during the same period.
Looking ahead to the next two years, out of the remaining 58%, only 19% plan to provide pay increases, and only 9% still plan to offer cost of living payments.
With 61% of employees relying on their employers to offer more support during the ongoing cost-of-living crisis, it will take cost-effective, salary-stretching employee benefits to bridge the gap.
2024 Ambitions and trends
REBA has also just released their seventh report from its ‘Transforming Engagement Series 2023 - People Risk Strategies for Successful Business Change’.
A key theme of the report is the need for businesses to achieve a digital and sustainable transformation whilst mitigating their people risks, which include:
Attaining and retaining skills.
Creating healthy employees to mitigate illness risk in an ageing workforce.
Aligning rewards and benefits to business strategy.
Supporting employee financial wellbeing.
64% of employers consider the cost of recruiting fresh skills to be a considerable financial risk over the next two years (REBA).
The solution is to create an Employee Value Proposition that enhances employee engagement, provides meaningful support, helps employees afford more of what matters, and keeps them healthy – physically, mentally, and financially.
Strategy and benefits alignment are critical.
Adding more benefits isn’t the answer. Adding the right mix of benefits to create maximum impact is needed.
The role of Salary Sacrifice
Cost-effectiveness, value for money, and a return on investment are at the heart of an aligned employee benefit strategy.
With Pluxee UK, salary sacrifice schemes are cost-neutral, having no employer set-up fees* and saving businesses money whilst offering employees more financial stability.
With salary sacrifice, your employees make their repayments at the Gross level, reducing their monthly salary whilst lowering their tax and NIC payments. It’s always worth noting that employees’ take-home pay is less while they make their repayments, but the reduced tax and NI Contributions balance things out.
Our Green Car salary sacrifice scheme allows your employees to save on the latest ultra-low emission and electric cars, powerful coupes, family-friendly SUVs, and practical hatchbacks.
We have over 18,000 Green Cars for your people to choose from – the biggest in the business! Everything’s taken care of, including annual servicing and maintenance, insurance, road tax, roadside assistance - even replacement tyres!
Reduce the cost of your employees’ commute and help them to reduce their carbon footprint!
Better still, as a UK government-backed scheme, your business can enjoy tax and NIC savings. Our Cycle to Work scheme works in the same way. Your employees spread the cost of the bike of their dreams, and everyone enjoys the tax and NIC savings!
Annual Leave Purchase
Our Annual Leave Purchase scheme is the salary sacrifice solution that gives your employees time to experience more of what really matters. An employee wellbeing booster, it helps you to promote a healthy work-life balance by allowing your people to take extra leave to explore what the world has to offer.
So simple, yet so effective!
An employee purchases an additional holiday allowance, and you deduct the cost over their monthly salary throughout the year, saving you money on your wage bill!
SmartPay helps your employees avoid high-interest loans or credit cards by spreading the up-front cost of technology, appliances, wellbeing, and lifestyle purchases through affordable and manageable salary deductions.
Considered a salary deduct as opposed to a salary sacrifice product since employees repay on their NET salary (there are no tax savings), SmartPay is also free* to add to your employee benefits package.
It’s a cost-neutral employee benefit that’s easy to implement and significantly boosts your employees’ financial wellbeing.
Get your 2024 employee benefits strategy off to the best start with Pluxee UK
As cost-neutral employee benefits go, salary sacrifice is a win for all!
Let’s consider Green Cars and our Cycle to Work schemes. We don’t charge an onboarding fee*, so there’s no upfront cost to your business when you add these benefits to your offering. When employees participate in the scheme, your business saves money! This releases funds you can use towards the cost of other employee benefits initiatives, making your offering cost-neutral.
SmartPay may not bring your business tax savings. Still, with no upfront costs*, you’re offering your employees the opportunity to stretch their salaries and avoid debt without investing an initial lump sum.
We’re more than just an employee benefits supplier.
At Pluxee UK, we take time to understand your business needs, supporting you in building a strategy that will help you achieve your goals. Request a call today to take the first step into a world of opportunities.
REBA - Financial Wellbeing Research 2023
REBA - Transforming Engagement Series 2023, People risk strategies for successful business change report.
* Terms and conditions apply.