Global benefits trends for the coming year09.02.21
Global Benefits Director
Twelve months ago, Covid-19 had barely entered much of the world’s consciousness. Though its effects were already being felt across Asia, here in the UK we remained blissfully ignorant. Fast forward to 2021 and the future remains uncertain, with no sign of the ‘new normal’ in sight. Nonetheless, for employers, it remains ever-important to plan ahead and be prepared for what may come.
What do we expect to see in the short term?
As we all continue to work from home where possible, balancing work, home (and for many, home-schooling!) those office-based benefits such as commuter allowances, lunch vouchers and childcare allowances remain of little use. Instead, we will continue to use online shopping – particularly for technology and fitness provisions – plus any support that health, wellbeing and EAP services can provide.
One of the impacts of Covid-19 is the limited use that employees can make of health and dental insurance (other than for urgent treatments). Employees may look to downgrade these where the cost can be allocated elsewhere, though we should expect to see this reverse as restrictions begin to lift.
Online services, virtual healthcare, subscriptions and access to online resources will continue to be popular for the foreseeable future, and are unlikely to change as employees start to accept these as the norm. A pandemic naturally focuses our attention on our health, so we are likely to see more requests for health checks, programmes on exercise and nutrition as well as longer term health assessments, such as DNA testing.
Looking further ahead to the end of restrictions, we can guarantee demand for travel-related benefits including travel insurance, discounts and allowances, once employees are able to holiday again.
What do we expect in the long term?
The effects of Covid-19 will undoubtedly continue to influence benefits in the longer term, even after many limitations are lifted. One thing we can look to see is a continued increase in the need for flexibility; choice has always remained an irreplaceable factor in employee benefits, but in the wake of the pandemic employees will value this freedom even more. When talking about flexible benefits, this will particularly manifest through choice in benefit options and the ability to upgrade benefit coverage e.g. increasing life cover or additional medical benefits.
Although we anticipate a return to office working, this is unlikely to be at the same scale as pre-pandemic. The workforce will retain flexibility in how they work, and therefore the benefits offered will need to reflect this flexibility also, allowing employees to select what is right for their personal situation. For example, does life insurance – usually a core benefit, worth 4 x annual salary – appeal to a Generation Z junior-level employee with no children? Would they prefer extra holiday to travel the world, or technology vouchers to invest in the latest gadgets? Regardless of their choice, they would undoubtedly prefer the choice to choose for themselves.
Furthermore, with the long-term financial cost and impact of Covid-19, there is a strong consensus from global HR and reward leaders that employee benefits financing will be shaken up. At the very least, most organisations are expecting budget cuts, so pay rises and bonuses will be limited, as will the scope for increasing benefit packages. This will mean employers need to do more with the global benefits they already have in place; making them work harder and ensure that they are valued and used by employees. Even if at the employee’s cost, a provision of choice may help with talent retention as employees look for career enhancement and pay rises elsewhere.
What trends are coming?
Wellbeing remains centre stage
Wellbeing of all varieties – be it financial, mental, physical or social – will continue to play a significant part of employee benefits packages globally. With a move away from the bricks-and-mortar-style gym membership benefits, allowances that employees can spend on activities or equipment of their choice will increase in popularity. Already in 2020, we saw an increasing number of customers investigate and begin to implement this benefit globally. As well as being flexible, it is an ideal choice to roll out across many locations as it can be tweaked both in terms of allowance available and also how it can be spent.
Flex funds come to the forefront
In a similar way, the growth of savings accounts in conjunction with a flexible benefits fund is an ideal way to allow employees to choose what they need for their circumstances, without being a huge dent in the company budget. Savings accounts have risen to recent popularity in countries including the USA, France and Singapore, allowing employees to put money aside on a monthly basis that can be spent on specific purposes. This includes everything from health costs to school fees. In some countries, flex funds can also serve as a holiday fund and may be contributed to by employers directly. This is particularly interesting where there is a 13-month salary payment made by employers that can also be allocated to this fund.
Emphasis on CSR
A raising awareness of environmental concerns has begun filtering through to benefits in the last five years or so, and this isn’t showing any sign of slowing down. Some organisations in Belgium current offer benefits in the form of eco vouchers, which provide allowances and discounts for eco-friendly items. Similarly, company car schemes providing affordable solutions for electric cars look to continue growing in popularity.
In addition to eco-friendly benefits, benefits focussed on social good, such as charitable giving are set to skyrocket. Participation in events for good causes, and company-wide charity days, as made famous by Salesforce, where employees trade a day’s leave or can use an allocated day for working with a charity are also high on the list of requested benefits.
Don’t forget the basics
Of course, it would be unwise to underestimate how important reliable core benefits are, and will continue to be. Access to quality and free healthcare remains a crucial benefit across the globe, especially where this is not provided by the state. Paying for expensive medical treatment is a cause of financial and mental worry in many countries as well as a physical concern. Covid-19 has highlighted this more than ever. Provision for illness or accident will continue to be a must have for those with families no matter where in the world they are.
Looking ahead, the challenge therefore is to balance these foundational benefits with the nice-to-haves, to ensure your workforce remains engaged, protected and well over the coming years.
Paul joined Benefex from Mercer in 2019 with a wealth of international benefits experience, having worked with a large number of high-profile, multinational clients to review their approach to global talent and reward. He leads Benefex’s global benefits delivery team and he’s doing an excellent job of it, if we may say so ourselves. He is skilled in international risk assessment and management, legislative compliance, trend research, cross-border claims, and customer relationship management. AND, he can speak fluent French, mais oui!