Every year seems to bring new challenges, so what should we be looking out for in 2018?
As always, changing regulations are a key theme. Despite a quiet Budget, the headline change is the increase in minimum pensions auto-enrolment contributions to 5% from April, including 3% from employees, with a further increase to 8%, with 5% from employees, in 2019. How affordable will that be for those on the current minimum rate when pay increases are lagging inflation and what impact will it have on opt outs and, ultimately, pensions adequacy? Some employers will undoubtedly be grappling with big issues around affordability alongside pay reviews. Thankfully, E.On already meets the 2019 contributions rates but we will still need to communicate with employees.
April 2018 also sees the full introduction of the Government’s tax-free childcare scheme. Employees need to know that they will not be able to sign up for the existing childcare voucher scheme after March, even if that is the better option for them. It is also the end of the transitional protections under last year’s optional remuneration rules, except for cars, vans, fuel, living accommodation and school fees which can continue to 2021, so employers will need to remind impacted employees and prepare them for increased costs.
Clearly change is not confined to regulation. We are seeing huge trends around wellbeing, especially in the financial space. Employees increasingly expect their employer to help them navigate the pensions and benefits choices available to them and make the most of stretched financial resources. We have seen unexpected high take up of low-cost payroll loans since they were introduced in the summer and we are considering a short-term savings scheme to sit alongside this and our longer-term share incentive plan and pensions offerings, all bolstered by financial education resources.
Then there is the impact of whatever the Government decides to do in response to the Taylor review for gig economy workers and the growing body of case law, ever-increasing employee expectations for flexibility and instant access, the growing impact of artificial intelligence (AI) on the workplace and of course engagement, engagement, engagement. It will not be a quiet year but is it ever?
Ant Donaldson is product expert – benefits at E.On