EMPLOYEE BENEFITS
Renegotiating supplier contracts could save a third on benefit costs
Employers could save up to 35% on their benefit costs if they review their current employee benefit packages such as group life assurance, income protection or private medical insurance, says Hewitt Associates.
Hewitt’s analysis suggests that companies are missing out on significant cost savings by not renegotiating their current benefit contracts. For example, a company with 1,000 employees could save up to £200,000 per benefit.
As Colin Bullen, Head of Health & Risk Benefits at Hewitt Associates, explains: “Shrinking budgets, coupled with the effects of the recession, have presented an opportunity to review and reset priorities. In many instances, benefit providers have become extremely competitive on price and are willing to adjust their rates to attract and retain business – a situation that is unlikely to last indefinitely."
What’s more, Hewitt believes that companies should not fall into the trap of simply cutting benefits to cut costs. While this may seem to be a short-term solution, it does not lead to long-term advantages.
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Advice on conducting a review
Hewitt urges companies to consider the following framework for review:
Check when a market review was last undertaken for all health and group risk benefits.
Where a review was undertaken 12 or more months previously, contact your adviser to undertake a review.
Make sure your adviser is offering competitive terms for the review – some advisers will only charge a fee if they are able to identify net savings for you.
Evaluate whether a strategic review of benefits might result in short or long-term savings to the business.
A final word
“In these challenging operating conditions, it is vital that companies are not seduced by short-term benefit cuts. Blanket benefit cuts do not lead to enduring business advantages. We are urging companies to start 2010 by acting with an eye to the longer term. A well-structured benefits policy that is valued by employees typically results in more engaged employees and is proven to boost workforce motivation. Rather than just taking an axe to current benefit structures to control costs, employers should reshape their benefits to meet member needs and demand the best value for money from their providers.” - Colin Bullen, Head of Health & Risk Benefits, Hewitt Associates.
Want to know more?
Hewitt Associates provides organisations with “expert human resources consulting and outsourcing solutions to help them anticipate and solve their most complex benefits, talent, and related financial challenges”. It works with companies to design, implement, communicate, and administer a wide range of human resources, retirement, investment management, health care, compensation, and talent management strategies. Hewitt has offices in more than 30 countries and employs approximately 23,000 associates. For more information, visit www.hewitt.com.