The majority (96%) of British workers underestimate the true amount that employers spend on employee benefits, according to research from Aon Consulting.
When the 1400 respondents to Aon’s survey were asked how much they thought their employer spends on their benefits as a percentage of their individual salary, almost two thirds (60%) said it was no more than 10%.
Just under half (42%) believed that 5% or less of their equivalent pay was put towards their benefits and more than a quarter (28%) had no idea at all what their organisation’s benefit spend was.
In reality businesses typically contribute between 20% and 40% of salary in additional benefits. Only 2% of those surveyed by Aon believed that their employer spent at least 20% of their salary on benefits.
Where an employee is earning £26,000 per year, 21% of their annual salary is typically spent on benefits – so their total package is typically worth around £31,460. When an employee is earning £60,000 per year, 39% of their annual salary is typically spent on benefits, taking their total package to £83,400
Interestingly, perceptions have changed very slightly in the past two years. When Aon measured the same perception in 2007, they found that 98% of workers underestimated the true amount that employers spend on benefits with more than two thirds (69%) saying they thought it was no more than 10%.
Gareth Ashley-Jones, head of flexible benefits at Aon consulting, said: “It is encouraging to see that some progress has been made since we commissioned our 2007 survey, however it is still only a mere 2% increase in awareness. There continues to be a huge gap between perception and reality – the research suggests that employees either take their benefits for granted or have no idea of what they actually are. In both cases employers are underselling their investment in the workforce.
“As the economy picks up, companies will need to work even harder to retain their talent. It makes business sense to improve employees’ understanding of their benefits – highly effective tools to attract, retain and motivate staff. Relatively simple steps like providing total reward statements to employees are one way of increasing awareness.”