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Which benefits do employees value the most?

Archive for June, 2016

Which benefits do employees value the most?

Thursday, June 30th, 2016

We’re living in a world where employee benefits are perhaps more varied than ever before. Those who work at Google reportedly enjoy free childcare, massages and even napping areas at work, whilst employees at Dropbox are provided with a stir fry bar, yoga sessions and Razor scooters to allow them to move around the workplace more quickly. Netflix, meanwhile, is one of several US companies which apparently offers its workers an unlimited amount of paid holiday.

But, whilst these perks might make these sound like dream places to work, are these the kind of benefits that employees truly value? Recent research suggests that what most people want from their employer is in fact a lot more straightforward. Read on to find out the benefits with the highest value amongst employees, to help ensure that what you’re offering the people in your company is in line with what they actually desire.

  • Retirement plans – A recent survey found that over 90% of respondents rated a retirement plan as their most valued employee benefit.It’s perhaps unsurprising that most people rank the knowledge of a secure future higher than anything else. Offering a retirement plan that meets your employees’ needs and expectations is therefore particularly important.
  • Life insurance – Knowing that your family and those in your care will be looked after should the worst happen to you is something that offers considerable peace of mind. Life insurance is a clear and open way to offer that to your employees and it’s something that more and more benefits packages now include.
  • Paid leave – The most common form of employee benefit today, with around four in five benefits packages including some form of paid leave. Perhaps a perk that many take for granted because of this, the fact that offering paid leave helps workers achieve financial stability whilst allowing them to take time off for holidays or health reasons without worry still makes it a benefit that is highly valued.
  • Telecommuting – Being able to work from home whilst also being able to access work directly from a home computer has become increasingly valued in recent years. The plus points of being able to do this include saving time and money on transportation, as well as easing the strain of other concerns such as childcare. As the stock of telecommuting continues to rise with employees, it’s a perk that is being offered more and more commonly within benefits packages.

What is pension salary sacrifice and can you still do it?

Thursday, June 30th, 2016

A recent report in the Financial Times discussed the changes to pensions tax relief that could be on the horizon, one of which is the potential for pension salary sacrifice to be abolished by the government. But, unless you’re someone currently either offering or receiving salary sacrifice, it’s quite likely that you’re unaware of both what it is and why it might soon be axed.

The thinking behind salary sacrifice is fairly straightforward. An employee agrees to give up part of their salary and, in exchange, they receive some form of non-cash benefit. This often comes in the form of childcare vouchers or increased pension contributions, hence the reason why it’s regularly referred to as ‘pension salary sacrifice’.

An additional benefit is the tax break salary sacrifice can offer. As the figure an employee is paid becomes lower, they also pay less tax and National Insurance. Your employer will also benefit from not having to pay Employer’s National Insurance contributions on the sacrificed part of the employee’s salary. What the employer does with this saving is up to them, but many will choose to pass at least some of these on to the employee.

If it seems like a win-win situation all round so far, there are potential pitfalls to consider too. Those who choose a salary sacrifice are deemed to be earning less, which can impact upon other factors including mortgage applications and maternity pay. State Pension, Jobseeker’s Allowance and Employment and Support Allowance are also areas that can be affected by earning less.

Life cover received through your employer may also be impacted if your salary decreases – whilst some employers ensure that cover isn’t affected by salary sacrifice, it’s always worth checking before making any decisions. It’s also worth remembering that the financial advantages can only be experienced if the benefits received from salary sacrifice are tax-free. These include childcare vouchers, pension contributions, company cars, work-related training and workplace parking.

Salary sacrifice continues to grow in popularity. However, as more employees take advantage of the scheme, the number of National Insurance payments the government receives from both those people and their employers goes down. As the amount of people entering salary sacrifice schemes goes up, getting rid of salary sacrifice is bound to look more and more like a good way for the government to save some money. At the moment, salary sacrifice is still available, but don’t be surprised if it disappears at some point in the future.

EU Referendum Summary

Monday, June 27th, 2016

Britain Takes Back Control. Or Does It?

This is our report on the result of the UK’s Referendum on continuing EU membership and the likely consequences of a Brexit vote. It was written over the weekend of 25th/26th June and completed at 5am on Monday morning. It’s our attempt to give you an overview of how things currently stand following the victory for Leave, but you will appreciate that events are moving very quickly so there may be a slight disconnect between the comments we wrote early on Monday, and events that developed later in the day.

The Result

‘I declare that the total votes cast for Remain were 16,141,241. The total votes cast for Leave were 17,410,742.’

‘I will do everything I can as Prime Minister to steady the ship… but I do not think it would be right for me to be the Captain.’

Two announcements, coming little more than an hour apart, which together sent the UK political system and its economy into wholly uncharted waters and sent stock markets and currency markets around the globe into turmoil.

The UK joined the European Union – then popularly known as the Common Market – on January 1st 1973. Ireland and Denmark joined at the same time, taking the original six members up to nine. On June 23rd 2016 the UK voted to leave the EU, now comprising 28 members and with five candidate countries hoping to join. There was a majority of over one million in favour of Leave, and – despite a petition calling for a second referendum passing the two million mark over the weekend – that appears to be that. And as several European leaders have said, ‘out is out.’ The ‘most complicated divorce in history’ is about to start.

The Instant Reaction

Both the FTSE 100 index of leading shares and the pound rose steadily throughout Thursday, as the markets anticipated a win for Remain. The bookmakers reported several six-figure bets on the status quo. However, as the early results came in and it became apparent that Leave had done far better than expected, both the pound and FTSE Futures (trading in the Far East) went sharply in the other direction.

The FTSE fell by 8% after opening in London, with shares in banks and housebuilders being especially badly hit: at one point shares in Barclays and RBS were down by more than 30%. By the end of trading, the FTSE had bounced back and it closed 2.8% down on the day at 6,139. To give that some context, the FTSE ended 2015 at 6,242 and finished both January and February below that level. Supporters of the ‘business as usual’ school of thought would also point out that the FTSE finished Friday 17th June at 6,021 – up 70 points on the day. If you follow that line of thought then the prospect of Brexit was worse for the stock market than the reality.

The pound was also hit sharply. Having been as high as $1.50 on Thursday, it touched levels on Friday that hadn’t been seen since 1985, at one point falling by 10% to $1.33. It finally closed the day down 9% at $1.36. In early trading in the Far East, on Monday 27th the pound was continuing to fall against the dollar.

In truth, there was always going to be a sharp reaction, whichever side won. But with Leave having triumphed, the next few days and weeks will be especially critical. Bank of England Governor Mark Carney will undoubtedly be a key figure. He says the bank is ‘well prepared’ and he stands ready with £250bn to pump into the banking system: whether that would be enough to stand up to market sentiment and determined selling of sterling by the hedge funds remains to be seen.

George Osborne – the UK Chancellor and a man whose political ambitions appear to have been fatally wounded by Brexit – will make a statement at 8am on Monday, seeking to provide reassurance about the UK’s economic and financial stability.

The reaction around Europe

There was a pre-Referendum boost for the Leave camp when Markus Kerber, the head of Germany’s equivalent of the CBI, said that post-Brexit trade barriers would be ‘very, very foolish.’ The UK is a highly significant market for many German and continental firms, and when the decision was announced there was plenty of conciliatory language. German Chancellor Angela Merkel was quoted as saying ‘there is no need to be nasty to Britain’ over the ‘divorce’ terms.

However, pressure was developing over the weekend for the UK to speed up those ‘divorce’ talks. EU President Jean-Claude Juncker said it ‘was not an amicable divorce’ – but then again, he claimed, it had never been ‘a deep love affair.’

Several right wing groups across Europe saw Brexit as legitimising their own calls for referenda on continuing membership. But pro-Europe groups were also opening the champagne, claiming that the UK had always been a brake on further European integration and cooperation.

The UK’s credit rating

One of the first casualties of the Brexit vote was the UK’s credit rating. Credit ratings agency Moody’s cut the outlook for the UK’s credit rating to negative, saying that the result would herald ‘a prolonged period of uncertainty.’

So what happens now?

First and foremost, the UK needs a new Prime Minister. Jeremy Corbyn’s position as Labour leader is also in question, but it is the next leader of the Conservative party who will be negotiating Britain’s exit from the EU. The early frontrunner is Boris Johnson, supposedly in a ‘dream team’ with Michael Gove. At the time of writing, Home Secretary Theresa May is emerging as the ‘Stop Boris’ candidate. May supported Remain, but did so very, very quietly.

David Cameron has said that he will stay on until October. However, it may be that events force him to step aside rather more quickly. Several European leaders are now calling for a ‘quickie’ divorce and the world’s financial markets are unlikely to grant the UK three months to find a new leader. You can see an argument that Cameron is now the lamest of lame ducks and on that basis it may be hard for him to continue in office until the Autumn.

Article 50

Cameron appears to want the next PM to invoke Article 50 – the formal process giving two years’ notice of our intention to quit the EU. Should the process not be completed within two years, then it can only be extended with the consent of all the other EU members.

Cameron had said that Britain would immediately invoke Article 50 – but the uncertainty of his own position calls this into question. If he is replaced by a pro-Brexit candidate (as seems likely), he or she is likely to argue that Article 50 works against the interests of the country leaving the EU: the new PM may seek a period of informal negotiation first.

As mentioned above, however, if there was one clear trend that emerged over the weekend, it was the desire of many European leaders to see Brexit happen quickly. They fear that an amicable, drawn-out settlement would simply encourage other countries to seek their own version of Brexit. David Cameron is due at a European summit on Tuesday: he can expect to hear ‘get on with it’ in several different languages.

How will Brexit affect your finances?

At this very early stage, the full impact of Brexit on our personal finances remains unclear, but we can already observe the following points.

The Pound and Prices

If the pound continues to fall then importing goods from other countries will be more expensive. This will push prices up and lead to a rise in inflation: but it’s good news for exporters as their goods become cheaper to buy.


An early example of prices going up will be seen on the petrol forecourts. Wholesale petrol prices are quoted in dollars, so as the pound falls against the dollar, petrol prices will rise. The Petrol Retailers Association are already talking of a rise of 2-3p per litre.

Savings and Investments

Without question, the biggest threat to the stock market and your savings and investments is a prolonged period of uncertainty – the one thing markets hate above everything else. Assuming everything is worked out relatively quickly then the stock market should return to a normal pattern of trading – and as George Osborne will say today, the fundamentals of the UK economy are relatively strong. We certainly cannot assume that Brexit would be bad for shares: in the long run the stock market will be affected by events around the world – China’s economy, growth in the Eurozone, the outlook for the US – as much as it will be affected by Brexit.

Clearly any rise in interest rates (see below) would be good news for savers.

Interest rates and Mortgages

Before the Referendum vote, Remain were saying that a vote to Leave would push up borrowing costs, leading to higher mortgage payments and increasing renting costs. But if Brexit were to lead to a period of low growth then interest rates could be cut in a bid to stimulate the economy. David Tinsley, UK economist at UBS, has said that he expects two interest rate cuts from the Bank of England over the next six months, taking rates from the current 0.5% to zero.

House Prices

There appears to be some consensus that Brexit could lead to a fall in house prices, especially in London and the South East. The Treasury has spoken of a fall of 10-18% over the next two years. Clearly not good news for existing homeowners, but anyone with children struggling to get a foot on the housing ladder may take a different view.


During the campaign, George Osborne gave dire warnings of tax rises in the event of a victory for Leave. This would be directly contrary to the Conservative’s election pledge and would be difficult to implement: much more likely is an extension of ‘austerity’ for a further two years beyond 2020.

The Leave campaign did give a pledge to remove the 5% VAT on domestic fuel required by EU law – but there were so many pledges flying about that it is perhaps best to not build this into your household budget just yet.


David Cameron did claim that a vote to Leave would threaten the ‘triple lock’ on pensions, but this presumes a poorer economy and a lower national income. If economic performance did deteriorate after Brexit, then the Bank of England might opt for a return to Quantitative Easing (QE) and/or lower interest rates. More QE would push down bond yields and with them annuity rates: so anyone buying a pension annuity would get less income for their money.

What will the UK’s relationship with Europe be when the dust has settled?

At this stage, it’s almost impossible to say. As of very early on Monday, the Labour party is in turmoil with 11 members of the Shadow Cabinet having resigned. The papers are reporting that pro-Remain MPs may attempt to block the decision of the Referendum. SNP leader Nicola Sturgeon is also threatening to veto Brexit and is demanding a second Scottish Independence referendum.

But let’s assume that Brexit goes ahead. The more rational Leave campaigners have been at pains to stress the UK’s links with Europe: the more rational European leaders will not risk losing such a big market, especially as Europe moves slowly out of a recession. Perhaps the best guess is that the UK will leave the EU (and quite quickly) but will retain some sort of ‘associate’ status. This would involve the UK making some contribution to the EU budget, accepting some of its trading rules and doing its best to control immigration with a points-based system, all things which potential Prime Minister-in-waiting, Boris Johnson, has started to discuss publicly. In the best traditions of politics and darkened rooms, a compromise may be reached – with both sides spinning it as a win. Will it work? No one knows; but when the dust finally settles, we may find that ‘out’ was not quite ‘out’ after all.

The next few days and weeks will be interesting, to put it mildly. We appreciate that our clients may have concerns and questions, so please don’t hesitate to get in touch with us at any time.

The ‘money-gap’ generation

Wednesday, June 22nd, 2016

A recent survey has revealed that employees from all across the age spectrum have considerable gaps in their financial knowledge. Out of over 500 respondents, more than seven in ten of people from the generation X and millennials age groups did not have an understanding of pension investments. Additionally, 49% of those surveyed said that their preferred method of receiving financial advice was face to face.

The last figure in particular suggests that employers need to considerably improve the financial education offered in the workplace. This will allow those working for them to be better informed about the financial opportunities they can go for, their options when planning their pension, and their overall financial health.

Millennials (respondents aged 18-29) named saving for a house as their greatest financial priority, with 44% of those surveyed putting it at number one. Worryingly, 71% of this group said that they do not understand pension investment, a figure that rises to 96% in those earning less than £20,000 a year. More promising, however, is the statistic that nearly nine out of ten said they would put more into their pension if they could afford to do so.

Those aged between 30 and 49, considered generation X, generally named planning for their retirement as the least of their concerns, despite the fact that it should undoubtedly be a major focus for them. In contrast, 42% said that they had lost sleep over paying their mortgage. When it comes to understanding pensions, there is a major disparity between earning brackets. Whilst 44% of those earning over £75,000 a year felt they had an adequate understanding, not a single respondent earning under £20,000 felt that they had any grasp of pension investments.

Unsurprisingly, those in the baby boomer bracket aged 50 and over had the greatest financial awareness. More than half named retirement as their top financial priority, with 43% saying the pressures of preparing financially for when they stop work has kept them awake at night. 57% also said they were planning to go part time with their employer if possible, phasing into retirement rather than stopping work straight away, a figure which surely would have been much lower in previous generations.

Property prices in 2016: higher or lower?

Wednesday, June 22nd, 2016

There are no end of financial reasons for the property market to be unpredictable at the moment, but recent figures from two leading statistical institutes make the situation during the start of 2016 even harder to fathom. The Office for National Statistics (ONS) released figures which suggest that property prices saw a considerable rise in March this year, whilst according to the Land Registry they fell almost everywhere during the same month.

The statistics from the ONS state that a typical home carried a pricetag of £292,000 during March. An increase of £8,000 on February’s figure, this represents the greatest monthly rise in property price since the financial crisis of 2008. According to the ONS, London and the South East saw the biggest increase, with the East of England seeing prices go up by 12.1%, the South East slightly higher at 12.2%, and the capital highest of all with a rise of 13%.

The Land Registry, meanwhile, tells a considerably different story. According to their statistics, house prices in March fell by 0.5% overall across England and Wales, with a reported average price of £189,901. Yorkshire and Humberside saw the greatest fall in prices, with property there losing 2.6% of their value. The West Midlands saw a dip of 2%, with a 1.2% drop in the North East. The one thing that the ONS and Land Registry agreed upon was that London came out the best, as the capital saw a rise of 0.2% in March according to the latter.

The discrepancy between the forecast from the two institutes could be for a number of reasons. The ONS, for example, is around a month behind other price indexes, including the Land Registry. What these conflicting reports do suggest, however, is that the housing market continues its recent unpredictable trend. Changes on stamp duty and the EU referendum looming large are just two likely contributing factors, meaning that it’s more important than ever to keep a close eye on the value of your property, as even the experts can’t agree on what’s going to happen next.

The continuing conundrum of British tipping

Wednesday, June 15th, 2016

Early in May, business secretary Sajid Javid raised the topic of tipping in restaurants, stating that tips should ‘go to the people you intended it to go to’. His comments are in reference to restaurants being able to hold back as much of the tips left for their serving staff as they wish, something which a considerable portion of restaurant chains regularly do.

Javid’s comments came as he announced a two-month consultation on proposals to remedy the unfair nature of tipping as it currently stands. The proposed changes include clearer guidance for customers that tipping is not compulsory, either limiting or preventing employers from being able to make deductions from tips (not including necessary taxes), and making the current voluntary code of practice around tipping statutory, thereby increasing the compliance by employers.

It’s an issue which raises its head every so often. Less than two years ago, Andrew Percy, the MP for Brigg and Goole, made similar comments about tipping. Percy stated in September 2014 that employees were ignoring the voluntary code and ‘creaming off’ their employees’ tips and that customers were in a ‘state of confusion’ about the whole system of tipping in Britain. The comments from the business secretary suggest that nothing has changed in the intervening time.

Tipping has arguably become more complicated than it needs to be. Not only does the tip you leave at the end of a meal no longer necessarily all go to the person who served you, but it’s also likely that you now look at other factors aside from the quality of the service you received to determine whether or not you tip at all. If you see a ‘service charge’ added to your bill – usually a percentage of the overall amount – it’s likely that you see this as being paid in place of a tip.

In actual fact, service charges and tips are not the same thing. A tip is a voluntary payment counted as a ‘personal reward’ to the server, whereas a service charge is classed as part of the restaurant’s income, which means each establishment can choose what to do with it. Many are discouraged from tipping when they’ve paid a service charge, delivering a double blow to the restaurant’s employees.

Things become even more complicated when you factor in the difference between a ‘tip’ and a ‘gratuity’ (yes, there is one). Whilst both come under the personal reward umbrella, a tip is usually left in cash whereas a gratuity is made through a card terminal, blurring the lines further as to how much your waiter or waitress will actually receive.