A quarter of employers will be forced to make adjustments to their benefits package by April following chancellor Philip Hammond’s decision to curtail some salary sacrifice benefits, new research has found.
In a survey of 160 employers by Jelf Employee Benefits, 24 per cent said they will have to make changes to their benefits package as a result of the Chancellor’s decision, with 47 per cent complaining they have not been given enough time and 27 per cent saying the changes had the potential to damage employee engagement or relations.
In his autumn 2016 Budget statement the new Chancellor announced the cessation of many new salary sacrifice schemes from April 2017, and the gradual phasing out of many other existing arrangements from 2018 onwards. Pensions, childcare vouchers, cycle to work schemes and ultra-low emissions cars are all unchanged by the policy decision. Salary sacrifice arrengements for cars, accommodation and school fees set up before April 2017 will be protected for up to four years.
The poll also found mounting appreciation amongst employers of the need for more financial education in the workplace as a result of the introduction of the Lifetime Isa, with 90 per cent of organisations polled saying the introduction of new saving options in last year’s Budget increasing the need for financial education. The poll found three in every four employers do not believe their employees will fully understand the limitations of the Lifetime Isa, and 26 per cent of employers expect some employees to save in a Lifetime Isa instead of a workplace pension.
Jelf Employee Benefits head of benefits strategy Steve Herbert says: “Change in this space has been widely expected for some time. Yet the pace of change has taken many employers by surprise. Employers across the country will now have to spend significant time and effort considering how to react to this announcement.
“These findings are really concerning. The UK already has a worrying productivity and employee engagement deficit and these figures need to be urgently improved as the country starts on the road to Brexit. Unfortunately, these changes have the potential to make a bad situation worse.
“I’m sure that those employers impacted by the change would like to see a more realistic timetable introduced in the March Budget statement. We hope the government will take note of these views and act accordingly.
“As for the Lifetime Isa, for many savers, the prospect of receiving government financial support towards a home purchase is a very attractive proposition. But scratch the surface and you will find that Lifetime Isa is a rather complex offering, with several limitations that savers really need to be aware of before opening such an account.”
