True value of company perks lost on British workforce

New research shows the majority of workers greatly underestimate the costs of their benefits

Companies urged to do more to communicate the true costs of perks

98 per cent of British workers underestimate the true amount that employers spend on benefits, according to new research released today by Aon Consulting, a leading pension, benefits and HR consulting firm. The findings reveal a large gap between perception and reality.

In Aonís national survey of 1300 working adults, when asked how much they think their company spends on their benefits as a percentage of their individual salary, over two thirds (69 per cent) said they thought it was no more than 10 per cent. Almost half (46 per cent) believed that just 5 per cent or less of their pay was put towards their benefits. Almost a quarter (23 per cent) put the figure at between 6 and 10 per cent of salary.

In reality, British companies are much more generous, typically contributing between 20 and up to 40 per cent of salary in additional benefits. Only 2 per cent of those surveyed by Aon believed that their employer spent at least 20 per cent of their salary on benefits.

Examples of real company spend on benefits

Where an employee is earning 26,000 per year, 21 percent of their annual salary is typically spent on benefits

Where an employee is earning 60,000 per year, 39 percent of their annual salary is spent on benefits

Employee benefits are non-wage compensations given to employees in addition to their salaries. Common benefits include private medical insurance, life assurance (or ìcoverî), disability income protection, holiday and pensions.

Most key groups have similar perceptions, although men are slightly more likely to estimate a higher amount ñ 13 per cent suggest it is more than 10 per cent of salary, compared with only 7 per cent of women. A significant proportion of all respondents (21 per cent) had no idea how much was spent on benefits.

Commenting on the surveyís findings, Gareth Ashley-Jones, head of flexible benefits at Aon consulting, said: ìThere is a large gap between perception and reality ñ the research shows clearly that people do not understand the true costs of their perks and suggests that they are taking them for granted.

ìEmployers are underselling themselves ñ they must do more to get the message across that benefits should be taken seriously as an important and indeed very substantial part of remuneration packages.

ìThe findings are a blow for companies who have invested a great deal of resource into offering attractive benefits packages, which can be highly effective tools to attract, retain and motivate staff. If they are to be genuinely valued by staff, then they need to understand the scale of investment being made on their behalf - this is the value of providing total reward statements to employees.î