How could the general election impact employee benefits?
Although pay is now outpacing the cost of living, it will take a few years more before real earnings are back to their pre-recessionary levels.
The idea of a living wage is one reward issue that will come to the fore during the election campaign. This could put pressure on some employers in certain market sectors to switch their reward budget from benefits towards increasing base pay.
In addition, I expect political parties to be looking at how they can boost the tax take in light of the way in which the government is still spending more than it is getting back in tax receipts.
One target could be the tax treatment of workplace pensions. For example, the annual allowance on pension contributions could be cut further, along with the lifetime allowance, with the justification being that it is high earners who enjoy the lion’s share of pension tax relief.
We could also see a review of salary sacrifice arrangements to examine whether they should be restricted to particular benefits.
And there could be workplace benefits that political parties want to promote through their tax regime. For example, concerns about the physical, mental and financial resilience of the UK workforce could stimulate debate on which employee benefits best foster employee wellbeing, as well as what can be done to encourage employers to provide such workplace benefits.
Looking ahead, we hope that the general election also encourages the political parties to debate why workplace productivity is so poor in the UK and what can be done to improve it, including the role of employee benefits in fostering long-term sustainable growth.
Original article on Employee Benefits – Employeebenefits.co.uk.