As you will all be aware, this
year we have seen a reduction in the Lifetime Allowance (LTA): the amount of
tax-free savings an individual can have in their pension fund upon retirement
has been reduced from £1.25 million, for the tax year 2015/16, to £1 million,
for the year 2016/17.[1]
Any pension fund exceeding the £1 million LTA will be taxed at a rate of 55% on
anything taken as a lump sum and at 25% if the excess is taken as an income
(such as a scheme pension or annuity).[2]
Consequently, it would be fair to
imagine that we will see a wider range of workplace saving solutions being
offered as employees shy away from the potential expense of saving into a
pension fund, instead seeking alternative means of saving. Investment is bound
to be seen as a popular alternative. Employees will want to be educated on the
subject of investment and employers may well have to provide that education.
It is impossible to discuss the
future of workplace benefit schemes without highlighting the role of
technology. The recent boom in wearable technology signals the end of
one-size-fits-all benefit schemes. Increasingly we have seen attention being
focussed on work/life balance; the truthful notion that happy, healthy workers
are more productive has become quite ubiquitous. For some time now employees
have been encouraged to monitor their health via healthcare apps on mobile
devices. And whilst digital medicine is entering the mainstream – via
smartphone apps, smartwatches and smartshirts – the UK’s population is ageing,
as is its workforce. Employers will feel the need to monitor the individual
health of their ageing workforce and will be able to do so, thanks to advanced
wearables.
Employee benefit packages will
also be centred on individual health. Specifically designed healthcare apps
will become ever more prevalent: employers will be able to use these apps to
monitor employee activity levels, blood sugar levels, and so on, as well as to
communicate benefit packages to employees.
Employees and potential employees
will seek jobs that offer health-centric benefit packages. And as wearables
become increasingly popular, health packages will need to reflect that.
Packages will need to be far more personalised and built upon each individual’s
personal health data. Employers will be able to gather real-time data from
their employees, allowing them to monitor their activity levels, their blood
sugar levels and so on. This will enable employers to derive a real sense of
the wellbeing of their employees and conversely, the causes of poor health.
It is important that benefit
packages can be communicated to employees individually and at all times. In the
UK, the number of smartphone users is set to rise to 46 million by 2018.[3]
Employees will want to access their benefit platforms at all times, no matter
their location. Consequently, benefit platforms will have to become
increasingly accessible, self-serviceable and interactive. Information is increasingly
being presented in a variety of formats: I would imagine that we will see more
video content being used to explain how different benefit platforms should be
used and how to access benefits.
The future of employee benefits is one that is
tied to technology. As technology becomes ever more personalised, it will be
possible for benefit schemes to be similarly personalised. Overall we will see
schemes tailored to the individual employee. Employers will benefit too, from a
workforce that is happy, healthy and taken care of. As long as benefit
platforms are able to keep up with employee/employer demands for efficiency and
accessibility, the future of benefits will indeed be bright. Mark Howlett
Chief Executive
[1]
Pensions Advisory Service, Lifetime Allowance Spotlight April 2015.
[2]
Pensions Advisory Service, Lifetime Allowance Spotlight April 2015.
[3] http://www.telegraph.co.uk/technology/mobile-phones/11287659/Quarter-of-the-world-will-be-using-smartphones-in-2016.html
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