Company Benefits – Things to Consider

Some companies will offer you company benefits when you become an employee. Some of these benefits will cover different aspects from age to money-saving or investment for the future. This guide will inform you of the different benefits you may encounter starting your new job.

 

Pensions

If you have just started a new job and you are over the age of 22, you will be automatically enrolled into the work pension scheme. This means that you and your employer will make monthly contributions to your pension pot. It must be noted that of the 6th April 2019 auto-enrolment minimum contributions have gone up – meaning that employers must contribute 3% and employees must contribute 5%. As of 2018, all employers by law must make contributions to your (as an employee) pension. You have the option to say ‘no’ to a pension auto-enrolment but if you do not do anything, you will automatically be opted in and pay the monthly contributions. If you are however, under the age of 22, you must ask your employer to become part of the pension scheme. To be eligible for auto-enrolment you must over 22 years old and must earn over £10,000 (inclusive). If you are younger than 22, although you have the right to sign up for the company pension scheme your employer is not required to contribute to it. The benefit of pensions is that it means you will earn more money over time from yourself and the employer, meaning when you retire, you will have more money.

 

Shares Schemes

There are many different types of share schemes companies can offer employees. One of the most common types of share schemes involves employers offering shares within the company at a reduced rate or matching the number of shares that an employee purchases. This would mean that the employee would become a shareholder in the company and would, therefore, have a say when it comes to the decision-making process of the company as a whole e.g. if the company was considering a merge with another company, shareholders would have a say in the decision as they would be a direct investor/partial owner. Meaning the more shares, you hold in a company, the more say you usually have in the company business decisions.

 

Illness or Injury

There are many different types of illness or injury benefit schemes that employers can offer their employees, including; Sick pay, income protection, private medical insurance, critical illness insurance.

 

  • Sick Pay – You are entitled to £89.35 per week Statutory Sick Pay (SSP) if you are too ill to work (you would need to provide medical records usually to your employer of this) which will be paid up to 28 weeks as part of the UK Government regulations. Some employers offer more sick pay, called Occupational Sick Pay or they may offer you a longer cover of sick pay.
  • Income Protection – If you are unable to work due to a long-term illness or injury, income protection cover will pay a percentage of an employee’s salary each month to the person affected. This can be used for numerous reasons including rent/mortgage purposes or other mandatory bills. Sometimes an employer can offer a Group Income Protection scheme, which would give you (usually) as an employee a cheaper rate than if you were to take the protection yourself. Normally these are set up to start when Statutory Sick Pay or Occupational Sick Pay ends, however, the employer can choose when they want this policy to start. Payments will continue until the employee starts back at work or reaches the retirement age stated in the policy or when the employer has stated on the policy plan.
  • Private Medical Insurance – This pays towards the cost of private treatment for certain medical problems. It does not cover every medical condition so employees should ensure to check the policy details. Some employers may also provide private dental and optical insurance for their employees which can cover the costs of more expensive treatments. These should also be checked in the policy details for what cover is provided.
  • Critical Illness Insurance – This can be provided by employers, which means that an employee can receive a tax-free lump sum if they are diagnosed with a specific medical condition that may be life-threatening. This gets paid out to the employee if they survive for a minimum period of time once they are diagnosed. The policy will list the period of time as well as the medical conditions that are eligible for the lump sum.

 

Life Insurance

This is sometimes referred to as Death in Service, by which a tax-free lump sum is paid out if an employee died. This can be used to provide support to those who may depend on them financially. The amount that is paid is usually worked out depending on the employees’ salary. You should ensure you understand how much would be paid out and whom to with the employer when this plan is taken out.

 

There are many other company benefits that an employer may provide to employees. For more information on the above as well as other company benefits, have a look at the Money Advice Service; https://www.moneyadviceservice.org.uk/en/categories/benefits-at-work

*Please note that the information included in this article is based upon findings generated in previous years and therefore may not apply to the current market. If you seek further information on this topic, please contact a financial adviser. This is not to be taken as advice or sales and Virtue Money takes no responsibility for any information provided within the links from this site and the information contained within these links should not be regarded as advice from Virtue Money.*