Benefits Information

A combination of bonuses and benefits is a much more effective way to create a motivated workforce than salary increases.
How can benefits and bonuses boost my income?

As far as many employers are concerned, one sure-fire way to boost the commitment and contentment of their staff is simply to pay them more money. But research has shown that this could actually have precisely the opposite effect and that a combination of bonuses and benefits is a much more effective way to create a happier and more motivated workforce.

Employees often undervalue the value of benefits when it comes to negotiating a salary. If your discussions aren't going particularly well, it's well worth trying to work into the package benefits that cost next to nothing for you employer, but mean a great deal to you.

So what benefits are available to you and what are they really worth?

  • Commission - Based on you meeting specific targets or KPIs and p[aid as a percentage. Its motivation to you to work harder to earn as much as possible and no employer would begrudge paying an employees more when they're bringing in money for the business.
  • Profit sharing or share options - Paid to employees based on the success of the company as a whole. This is usually offered to managers as a way to encourage them to make their team focus on the overall business objectives.
  • Paid holidays or paid sick leave - There is a bare minimum number of holidays and sick leave your employer must offer so anything on top of this can be classed as a benefit. The cost to employers is very little as a well rested employee is generally a happier and more productive one.
  • Education reimbursement - If you're looking to brush up on your skills or gain a new qualification it's not always necessary t quit your job and become a full time student. Having the desire to broaden your knowledge shows your employer you're potential and many will be happy to contribute towards the costs.
  • Life insurance - It's the last thing we want to think about, but your family will be well looked after if the worst happens so sign up to this benefit whenever you're given the opportunity.
  • Pension - Your employer must provide access to a pension scheme and many take up the option to add additional contributions to your monthly payments. You may not see this money immediately, but it will be a major benefit when the time comes to retire.
  • Company car - A vehicle is usually offered to employees who spend a large proportion of their working life on the move. It saves the company money in terms of travel costs and can give you the chance to use the car in your own time as well.
  • Subsidised travel or season ticket loans - Season tickets for public transport are a pricey one off fee, but offer huge savings over the course of a year. If you can't afford to pay up, your employer may lend you the money and deduct it from your wages on a monthly basis. For out of town office complexes, shuttle busses from local train stations are very common and cost employees little, if anything, to use.
  • Home working - Apart from the benefits of reduced travel and food costs, you will be likely to be provided with Internet access, a laptop, mobile phone and any other equipment you need to make your home office an effective place to work. It will also probably mean you can use there items for your own personal use as well.
  • Flexible working - There are plenty of flexible working packages available that help you achieve an effective workplace balance. From working around school hours to fulfilling your weekly hours whenever you like, finding a mutually beneficial structure for you and your employer can make you a much more effective worker.
  • Child day care - High costs of childcare often put new parents off returning to work full time. If employees don't want to lose the services of a skilled and valued employee they may offer childcare facilities either in-house or through a local nursery.
  • Gym membership - Whether subsidised or free, it's a great way for employers to give you a tangible benefit that could save you plenty of pounds - both in your wallet and your belly.
  • Subsidised food and drink - If you count up the cost of snacks, coffee, water and lunch over the course of a year it can be a frighteningly large chunk of your salary. Any moves employers can make to reduce this cost is a major bargaining tool.
  • Casual dress - It's not usually seen as a benefit, but think about how much money you could save if you can wear the same clothes in the workplace as you do in your spare time.

Pensions are a way of saving for retirement so when you reach a certain age, you can still get a regular income for life.
Showing them you are a real pro

A pension is a form of saving for retirement, with some associated tax advantages. When you retire or reach a certain age, a pension scheme pays you a regular income for life. For most companies it's an obligation to give you access to a pension scheme or at least point you towards a financial advisor who can explain the ins and outs of the thousands of pension options that are available.

How much pension do you need?
The big question. You can have as big a pension as you can afford, but here are some tips to get a rough idea of how much you will actually need:

It's difficult to judge what your situation will be if your retirement is a long way away, but if you take your fixed living costs, such as food, council tax and electricity, and add some estimated annual leisure activities, such as holidays, theatre trips and dining out, you should be able to get an estimated monthly expenditure.

Remember that unlike your current situation, by the time you retire you may no longer be paying rent or a mortgage and you will also not have to encounter work related costs, such as commuting expenses and buying work attire.

Once you've got an outline figure for your desired retirement income, take it to an independent financial adviser or other pension expert and plan how to provide for it. You could also try one of the many pension calculators available to give you a quick idea.

Remember, the earlier you start a pension, the less you will have to pay each month to reach your target retirement income.

State pensions
Once upon a time, this was all that was required. Nowadays, its value has slowly eroded to the point where it now barely provides a living income, even with no mortgage or other major costs to pay. Unless you're happy to spend the rest of your life counting every penny, you will almost certainly need to make additional private provision for your retirement.

The amount of State Pension you do receive will depend on the level of National Insurance contributions you've made throughout your working life. Even then, if you haven't paid NI contributions for enough 'qualifying years', you may not get the full amount.

Company pension schemes
Many companies offer their own scheme and you're advised to sign up to it, especially if you don't have alternative provision. There are two main types of scheme:

  • Salary related pensions - based on your salary and the number of years you are in the scheme. These generally call for higher contributions through the life of the plan.
  • Money purchase pensions - based on how much you pay in and how those funds have performed over the life of the scheme. This is usually used to buy an 'annuity' or income for life.

Company schemes require you to make a regular contribution based on a percentage of your salary, to which your employer may choose to make an additional payment. It's likely that you will also be able to make extra voluntary contributions of your own to increase your final pension benefits.

If you pay into a company scheme, your employer pays your contributions before tax has been deducted, which essentially means your tax bill is reduced.

The age when you can actually draw your pension is set out in the terms and conditions of each scheme. Ask your company pension administrator or external financial advisor for the specific details of your pension.

Personal pensions
In addition to conventional pension schemes, where you place your money with a trusted provider and let them do the sums, there are plenty of alternative ways to invest to provide an income for yourself in retirement.

Most of these involve bricks and mortar and can be anything from letting out multiple properties to provide a regular income or trading down to a smaller property to free up funds. The housing market is relatively stable but has peaks and troughs based on many uncontrollable factors.

If you want to get really involved, a Self Invested Personal Pension (SIPP) plan allows you to work closely with an advisor to where and how to invest your money for the best return.

All investment strategies carry an element of risk, and some can be extremely risky. As a general rule, you should never place a large proportion of your funds with one provider or solution. Always try to spread your exposure to risk and unless you're an expert in investments and pensions, always seek advice before making any investment decision.

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