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Some important Employee Benefits dates for your diary

2018 heralds yet more change for employer sponsored Employee Benefits. In this article we look at three key dates for employers and their employees.

Change has become a constant in the world of UK Employee Benefits. The last decade has seen significant transformations in the compensation packages offered by employers, the usage and understanding of the benefits on offer by employees, and indeed an ever greater involvement and influence by central Government on the world of benefits provision.

And now we have reached 2018 – a year in which further major changes in Employee Benefits provision lie ahead. So what are these changes, and what actions should employers be taking in this regard?

The three most immediate and pressing changes are detailed below:

Fit for Work assessments to cease

As we covered in this article in December, the Government has taken the rather unexpected decision to bring to an end the Fit for Work (FfW) assessment service in England and Wales on 31st March 2018, and likewise end the service in Scotland from 31st May 2018.

The reasons behind the cessation of the service are many and varied, and were briefly explored in our previous article. Yet the more important and immediate concern for 2018 is that the removal of this Government funded service will leave many employers without any default option to assess an illness or injury to their employees, and therefore no credible return to work plan is likely to be established.

We would therefore encourage employers to revisit their policies, procedures, and communications around long-term absences to see if the Fit for Work service is mentioned, and if so take the appropriate action to rectify this before the above dates. We would also suggest that employers may want to look at alternative private provision for return to work assessments provided via Occupational Health services and/or as part of a wider insured arrangement such as a Group Income Protection plan.

Pensions Auto-Enrolment – Increase to statutory minimum contributions

Virtually every employer in the United Kingdom is by now aware of – and complying with – Auto-Enrolment legislation. Indeed, according to a recent report1 by the Department for Work and Pensions (DWP), more than 9 million individuals have been enrolled into a workplace pension, with 9 in every 10 of those continuing to save after the initial enrolment period. Such figures clearly point to the success of the new regime.

But this is only stage 1 in solving the problem of the UK savings gap. The next step is to increase the levels of both employer and employee contributions to ensure that the savings made produce a meaningful pension income when retirement date is eventually reached. For this reason the legislation imposes an increase to the minimum levels of Auto-Enrolment pension contributions for both employees and employers.

The first such increase is due on the 6th April 2018, with a further escalation just a year later. Some employers will find that their pension scheme contribution levels exceed these new minimums already, but many others will find that contributions for some or all employees will now go up.

Clearly this is a major change – enforced by legislation – so we would suggest that all employers ensure that they are fully prepared and compliant with the new rules. In particular we would encourage employers to undertake employee communication and education exercises to ensure that the enrolled workforce is fully aware of the changes that they may see in their take-home pay and pension scheme statements.

The last call for Childcare Vouchers

Finally, but certainly not least, it appears that the end is finally nigh for Childcare Vouchers which close to new savers from April this year.

Childcare Vouchers were first introduced by the then Labour government more than a decade ago, and this popular benefit has been widely used by employed working parents as a means of reducing the significant costs associated with childcare. This was achieved through a mechanism known as Salary Sacrifice, which resulted in an employee saving both National Insurance and Income Tax on the amount redirected to Childcare Vouchers.

Childcare Vouchers are now being phased-out by the Government, who have instead introduced a replacement called Tax Free Childcare, which is more widely available to parents (including the self-employed) but is not always as financially beneficial as the existing vouchers. This has been recognised by Government, who are therefore allowing those already saving in Childcare Vouchers to retain that right after April. There is therefore one last opportunity for new savers to commence Childcare Vouchers and then retain that option into the future. To do this, a salary sacrifice deduction would have to be made - at the latest - in the March 2018 pay period.

We would therefore urge employers to remind their employees of this option. It’s a complex subject – and one we looked at in more detail in this article last year (in which we attempted to answer some of the more common questions of the moment) – so an early communication to all parent employees would be advisable so that they have time to consider the options available to them.

So there is plenty for employers to be looking at over the next few months in the Employee Benefits space. For more information on any of the above please speak to your usual Jelf Consultant in the first instance.

 

Steve Herbert is Head of Benefits Strategy at Jelf Employee Benefits

[1] Automatic Enrolment Review 2017: Maintaining the Momentum (DWP)

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