Market Research Logo

UK SME Adoption of Employee Benefits 2017

UK SME Adoption of Employee Benefits 2017

Summary

UK SME Adoption of Employee Benefits 2017, report highlights the opportunities in offering employee benefits by sizing the number of SMEs in the UK. It discusses the penetration of employee benefits among SMEs and factors affecting this, such as pension auto-enrolment. It explores how employee benefits are purchased, which are the top insurers, and the importance of offering benefits in attracting and retaining employees.

The report explores the provision of 10 employee benefits among UK SMEs across pensions, protection insurance, and healthcare benefits, which include private company pensions, pension contributions into a NEST government auto-enrolment scheme, life insurance, critical illness insurance, income protection insurance, private health insurance, healthcare cash plans, dental plans, cycle-to-work schemes, and childcare vouchers.

Employee benefits are a range of products provided to employees in addition to their normal salaries. Their purpose is to increase the economic security and wellbeing of staff, and they are pivotal in both attracting and retaining employees.

Businesses that offer more employee benefits are considered to be more attractive to employees. It means individuals do not have to purchase the equivalent benefits themselves, making their employee contracts more valuable. Providing employee benefits is also in employers’ best interests; encouraging health and wellbeing among employees will help to prevent illness and injury, and benefits can help get employees back to work sooner.

Scope

  • Pensions are the most commonly offered employee benefit among SMEs due to auto-enrolment. This is followed by private health insurance, and life insurance and critical illness insurance. Penetration of all employee benefit products increases with SME size.
  • Pensions are the most commonly offered employee benefit among SMEs due to auto-enrolment. This is followed by private health insurance, and life insurance and critical illness insurance. Penetration of all employee benefit products increases with SME size.
  • The introduction of auto-enrolment, increases in business rates, rises in the national living wage, and Brexit have been putting pressure on SME profits. In order to cut costs SMEs may look to reduce the provision of employee benefits. SME business numbers and the employment rate may also fall due to pressures.
  • Protection products are increasingly providing services such as virtual GPs, wellbeing apps that assess health using wearables, and rehabilitation services. Private medical insurance allows employees to skip NHS waiting lists, while healthcare cash plans and dental plans help promote health through free, regular check-ups.
Reasons to buy
  • Understand the opportunity in cross-selling employee benefits alongside general insurance for SMEs.
  • Adjust your strategy by discovering which are the most common employee benefits provided by UK SMEs, who the top providers are, and how employee benefits are purchased.
  • Understand the current pressure on SMEs and how this may impact the sale of employee benefits.
  • Be aware of how providers are innovating in the employee benefit space.


  • Executive Summary
    • It benefits employers to offer their employees benefits
  • Introduction
  • SME Market Dynamics
    • SMEs are significant within the UK business landscape
    • Sole traders have no need to provide benefits for a workforce
    • London is the prime location for UK SMEs
      • Table Number of UK SMEs (including sole trader), split by region (%), 2016
    • Construction is the top SME industry
    • The number of UK SMEs has been growing
    • SME profits are under pressure
  • What Employees Want
    • Employee benefits are only one aspect of employee satisfaction
    • Employees would prefer a pay rise over employee benefits
    • The importance of different benefits differs between individuals
    • Employee benefits help those who are struggling financially
    • The value and provision of employee benefits has been falling over time
    • Understanding how to capture sole traders as they grow is key
  • SME Adoption of Employee Benefits
    • Pensions are the most commonly provided employee benefit
    • Penetration of employee benefits increases by business size
    • A quarter of SMEs do not provide any employee benefits
    • All benefits are deemed to be of fairly equal importance despite differences in penetration
    • Importance of employee benefits differs by SME size
      • Table Importance of benefits and top three products by SME size (%), 2017
    • London, the West Midlands, and Northern Ireland have the highest uptake
    • SMEs in the mining and utility sectors have the highest penetration
    • AXA, Aviva, and BUPA are the dominant employee benefit providers
      • Table Top 3 providers among SMEs (excluding sole traders), market share by employee benefit (%), 2017
    • AXA and Aviva have product areas designed especially for SMEs
    • Scottish Widows markets towards advisors and so larger businesses
    • Employee benefits are cross-sold alongside general insurance
    • The direct channel is king for SMEs
      • Table Distribution among UK SMEs (excluding sole traders) by SME size, 2017
    • The direct channel is greatest for purchasing private company pensions
      • Table Distribution among UK SMEs (excluding sole traders) by employee benefit (%), 2017
    • SMEs looking for advice prefer to purchase in person
  • PENSIONS
    • Pensions overview
    • Auto-enrolment: Providing a pension is now compulsory
    • Auto-enrolment: Minimum pension contributions will rise to 8% by April 2019
    • Auto-enrolment: NEST is the government's own pension scheme
    • Auto-enrolment: Pressure will increase for SMEs due to auto-enrolment
    • Most SMEs pay a standard pension percentage to all employees
    • Private company pension: penetration
    • Private company pension: distribution, insurer, and importance
      • Table Which channel and method were used to purchase?
    • NEST scheme: penetration
    • NEST scheme: distribution, insurer, and importance
      • Table Which channel and method were used to purchase?
    • Pensions have the highest penetration among all employee benefits
  • PROTECTION INSURANCE
    • Protection Insurance Overview
    • Employers want to ensure their workforce is healthy
    • Protection providers want to help employees manage their health
    • Life insurance: penetration
    • Life insurance: distribution, insurer, and importance
      • Table Which channel and method were used to purchase?
    • Critical illness insurance: penetration
    • Critical illness insurance: distribution, insurer, and importance
      • Table Which channel and method were used to purchase?
    • Income protection insurance: penetration
    • Income protection insurance: distribution, insurer, and importance
      • Table Which channel and method were used to purchase?
    • London has the highest penetration for protection products
  • HEALTHCARE BENEFITS
    • Healthcare benefits overview
    • Private health insurance: penetration
    • Private health insurance: distribution, insurer, and importance
      • Table Which channel and method were used to purchase?
    • Healthcare cash plans: penetration
    • Healthcare cash plans: distribution, insurer, and importance
      • Table Which channel and method were used to purchase?
    • Dental plans: penetration
    • Dental plans: distribution, insurer, and importance
      • Table Which channel and method were used to purchase?
    • London, Northern Ireland, and the West Midlands are top for healthcare products
  • OTHER BENEFITS
    • Childcare vouchers: penetration
    • Childcare vouchers: penetration by region and importance of benefit
    • Cycle-to-work scheme
    • Cycle-to-work scheme: penetration by region and importance of benefit
  • APPENDIX
    • Abbreviations, acronyms, and definitions
    • Methodology
    • Secondary sources

Download our eBook: How to Succeed Using Market Research

Learn how to effectively navigate the market research process to help guide your organization on the journey to success.

Download eBook

Share this report