More than three-quarters (77%) of small and medium-sized enterprises (SMEs) intend to revamp their employee benefits packages, according to Employee Benefit Trends in UK SMEs, a report from Howden Employee Benefits with YouGov.
Areas to be expanded include private medical insurance (PMI) mental health support and critical illness insurance.
The research, conducted by YouGov, surveyed 901 UK SMEs (520 with fewer than 30 employees, 198 with 30-99 employees, and 183 with 100-249 employees) between Spring and Summer 2024.
The report highlighted the unique pressures SMEs face in today’s economic climate and the strategic adjustments they’re making to provide comprehensive, cost-effective employee benefits.
The report also found a significant benefits gap.
Only 53% of the SMEs surveyed provide private medical insurance (PMI), while only 49% offer mental health support.
Expansion planned
But many companies are planning to expand their support.
Some 43% of the SMEs surveyed said they are boosting access to PMI to provide faster access to healthcare solutions.
And another 46% are expanding mental health support, while 36% are exploring critical illness insurance.
For lifestyle and financial perks 38% of the firms surveyed said they are adding gym memberships or lifestyle discounts.
Recruitment challenges are driving much of the expansion in coverage and benefits.
A total of 29% of SMEs surveyed said that recruitment and retention are significant challenges and offering competitive benefits is now essential to retain top talent.
The report also highlights that jobseekers prioritise healthcare, and mental health support and pensions when choosing employers.
That may mean that businesses are listening to the wants and needs of current and future employees with SMEs most likely to be planning changes to these three benefits.
Perfect storm
Cheryl Brennan, managing director of Howden Employee Benefits, said: “SMEs are navigating a perfect storm of rising costs, recruitment pressures, and increased employee demand for healthcare, particularly mental health support.
“However, the research shows that many businesses understand that offering comprehensive benefits can be a powerful tool to improve employee wellbeing, reduce absenteeism, drive productivity and strengthen recruitment and retention of talent.
“Now that SMEs face higher Employer National Insurance (NIC) contributions and increased tax bills further to the recent budget, they can address both these challenges and the UK’s retirement shortfall by implementing salary sacrifice, if they don’t already.
“Investing in the right benefits can lay the foundation for a more productive and resilient workforce.”
SME success is vital
Mark Fosh, executive director of SME at Howden Employee Benefits, said: “With 5.6 million SMEs at the heart of the UK economy, their success is vital.
“Despite rising operational costs and National Insurance contributions, SMEs still have practical options to address these challenges.
“By adopting salary sacrifice schemes and working with an employee benefits consultant to review and optimise their benefits packages, businesses can ensure they’re getting the best value for money while accessing additional value-added services.
“These steps can provide immediate financial relief, result in a better experience for employees and build a stronger, more engaged workforce.”
