- Employee Benefit Consultants believe they need to rethink what they offer clients
- More than one in four believe employees could opt out of pensions
The launch of higher employee and employer minimum contributions is an opportunity to highlight the value of Employee Benefits, new research1 from MetLife UK shows.
But Employee Benefit Consultants (EBCs) and providers need to enhance their offer to clients as minimum contribution rates increases come into effect, the independent study among EBCs found.
Around 85% of EBCs questioned said auto-enrolment, which has just celebrated its 5th anniversary and seen 8.5 million employees start saving and 800,000 employers sign up, has delivered a step-change in funding for benefits.
However, EBCs admit they need to enhance their offer to clients ahead of the introduction of new minimum contribution rates for employers and employees from April 2018. Employer contributions increase from 1% of salary to 2% while employee contributions rise from 1% to 3%.
MetLife’s own research shows employees are more engaged with their benefits – more than half (55%) of employees highly value the benefits they receive at work which was an increase of 25% on a previous study in 2015.
Industry data shows predictions that the launch of auto-enrolment would expand the Group Risk market with more employers signing up have proved over-optimistic – the experience has been that existing schemes grew but the new employer market did not.
Nearly four out of five (78%) of EBCs believe the rise in auto-enrolment minimum contributions will not lead to cuts in benefit budgets and 34% believe employers will even increase their benefit budgets.
However, 27% of EBCs are concerned that employees will drop out of pensions because of increases in their contributions.
Around one in three (33%) of consultants believe Group Risk providers need to review the products they offer clients as a result of the rise in contributions while 73% of consultants say they are concerned about the rising cost of benefits provision for employers.
Adrian Matthews, Employee Benefits Director, MetLife UK said: “The increase in minimum contributions for employers and employees next April is a potential challenge for employee benefits providers and consultants and needs to be addressed.
“It is encouraging that EBCs do not believe it will mean a major drop off in employee contributions but providers and consultants need to focus on ensuring the value of benefits is widely understood.
“The evidence is that employees are increasingly valuing the benefits they receive at work which creates a real opportunity for businesses to align their benefits strategy with their business strategy.”
MetLife is focused on further enhancing strategic partnerships with leading brokers and EBCs as it expands its business among large corporates including multi-national clients as well as SMEs.
It has generated significant momentum in the market thanks to a relentless focus on customer needs, innovative propositions, a culture of continuous improvement and a commitment to building strong partnerships and is established as the UK’s third largest Group Life provider by number of schemes it insures3 and the fourth largest Group Income provider.