Are We Losing Sight of What’s Really Important?

 

Social media, we are told, is driving down our attention spans and changing our value system. If it’s not instant, we’re not interested, and a job well done is no longer a matter of personal pride, it’s only a job well done if someone who you have never met, probably on a different continent, gives you a “thumbs up” or a “like”.    

This change of ethos is now starting to have a significant impact on the world of employee benefits. More and more, we are seeing companies reconsidering their traditional benefits in favour of schemes that have an instant impact.

Consider company ABC Ltd. They have, and have had for many years, a pension, a Group Life Assurance Scheme (also known as Death in Service) and a Group Income Protection Plan. Employees have in place, therefore, a range of schemes that will protect their income in retirement; protect their nearest and dearest with a significant lump sum in the event of their premature death; and protect their own income in the event of long term inability to work through illness or accident meaning bills can be paid and financial stress is not added to the other inevitable stresses such a situation would bring.

Having consulted with staff and reviewed what is available in the market, ABC Ltd. are now reconsidering their Group income Protection plan in favour of a Health Cash Plan. ABC Ltd. like the idea because the Health Cash Plan is much cheaper, and employees like the idea because they can get back some or all the cost of a range of day-to-day procedures including eye tests, glasses and/or contact lenses. Dental check-ups and remedial work, physiotherapy etc. Win win.

But is pandering to the views of the short-termists a responsible position? Looking at the statistics, virtually everyone is going to go to the optician or dentist in a 3-year period. The chances of someone being struck down to the extent that they can no longer do their job are, by comparison, incredibly low. But it does happen.

30 year olds are diagnosed with MS. 40 year olds are involved in traffic accidents. 50 year olds have heart attacks. Everyone gets cancer. Not scenarios we want to think about but burying heads in the sand is not the answer. Living involves costs, hence the phrase, cost of living. Mortgages still need to be paid. The lights need to be kept on. Food still needs to be cooked. Transport costs don’t go away – in fact, they may increase because of the need for trips to the hospital.

Faced with the prospect of not being able to work and having less than £100 per week of sick pay to cover all the costs of living, how many people will be thankful their employer ditched their Group Income Protection Plan in favour of a scheme that gave them back £50 whenever they went to the dentist?

You can argue, and some employers use this to justify not having such benefits in the first place, that it is not the responsibility of employers to look after their employees come what may. Their responsibility stops once the employee has left the place of work. If an employee does not use their salary wisely by protecting themselves against what life may throw at them, it is not the employer’s fault. Many employers, however, take a much more rounded attitude and want to look after their workforce.

 

However, faced with the pressures of operating schemes that employees don’t value and being told that other companies are better because they have an instant gratification scheme of some sort, employers are replacing insurance based schemes with “pay today, cash back tomorrow” type arrangements.

Insurance, for many people, is a dirty word. It’s a money pit. Pay, pay, pay and never see any return. Try and claim and the insurer will do its level best to decline its responsibilities. But isn’t a lot of this driven by people’s attitude that money back is a right?

Employee satisfaction – whether discerned by survey or focus group or individual consultation – is now driving HR policies. And insurance-based schemes are being jettisoned at an alarming rate as a result. I understand why but I can’t agree.

Ask the poor soul who is lying in hospital having been cut from the wreckage of yet another accident on the A1 which they are happier about. The fact that ABC Ltd. kept their Group income Protection Plan and the bills will continue to be paid until a return to work is possible, even if it is many years hence, or that the £50 contribution towards her recent eye test has just been paid into her bank account? I know which answer I’d give.

For a benefit audit that isn’t driven by the imperative of instant returns, contact us on 0333 241 3350 or email pmurphy@richmondhousecs.co.uk

This information is provided strictly for general consideration only. No action must be taken or refrained from based on its contents alone. Accordingly, no responsibility can be assumed for any loss occasioned about the content hereof and any such action or inaction. Professional advice is necessary for every case.

 

Peter Murphy DipPFS

Benefits Adviser