A successful business runs on the strength of its people. That is why employee turnover is such a problem.
If you lose valuable members of staff, you may experience a significant dip in productivity and morale. There are also considerable costs involved in hiring and training a replacement.
You can prevent disruption to your business by focusing on employee retention and taking steps to encourage team members to stay with you for the long term. There are many factors at play here, but research shows that the benefits package you offer is crucial.
Read on to learn more.
38% of employees plan to look for a new job in 2026
You may feel that your team are happy in their jobs and unlikely to leave anytime soon. However, the scale of the employee retention issue might be larger than you realise.
According to research from New Possible, 38% of those surveyed said they were planning to search for another job in 2026. This figure rises to 53% among those aged 18 to 34.
As such, you may be more likely to face issues with staff turnover than you thought, and this could be very costly.
Indeed, figures from Oxford Economics suggest that the average cost of losing an employee who earns £25,000 or more is £30,614.
Consequently, regular departures can put significant financial strain on your business.
Only 12% of employees are happy with their current benefits package
There are many reasons why employees choose to search for a new job.
As expected, salary is a key driver of retention, and Wellhub reports that competitive pay is the main reason employees stay with a business. However, 57% report that a good benefits package is a priority, making it the second most important factor after pay.
Crucially, the same source reveals that only 12% of employees are happy with their current rewards package. This suggests that many companies are falling behind on employee benefits, and this could drive high levels of staff turnover.
3 ways to improve your employee benefits package
1. Understand what is important to your employees
Offering benefits that your employees do not value will not do much to improve retention. That is why you must take time to understand which specific benefits are most important to your team.
You might consider surveying them and discussing benefits during annual reviews. Additionally, you might have data about existing benefits and how often they are used. For instance, if you offer healthcare benefits, you will be able to see what claims have been made.
By gathering feedback from your employees, you can understand which benefits will be most valuable to them and tailor your package accordingly.
2. Embrace flexible working practices
As working practices change, more businesses offer flexible hours and allow employees to work from home.
Studies show that this could be a major factor in staff retention. According to Drewberry, 42% of employees said they wanted their employer to offer flexible working hours, while 39% hoped for a reduced working week. This makes flexible working practices the most desired employee benefit.
Where possible, you may want to consider giving employees more control over their schedules. Otherwise, they may be more likely to consider moving to a more flexible business.
3. Take advantage of pension contributions
Pension contributions are another key consideration for your employees. As the cost of living increases and it becomes more difficult to save for a comfortable retirement, people may be more likely to move to a company that offers more help with saving.
That is why the research from Drewberry found that 37% of employees wanted enhanced pension contributions from their employer.
In addition, employer pension contributions could reduce your Corporation Tax bill. Provided the payments are “wholly and exclusively for business purposes” and in line with the remuneration of others in the business, the contributions are considered an allowable expense.
Employer pension contributions are also exempt from National Insurance contributions (NICs).
Additionally, you could offer a salary sacrifice scheme for pension contributions, which may increase NIC savings for you and reduce the Income Tax and NICs your employees pay. However, changes from April 2029 will limit NIC savings to the first £2,000 that employees sacrifice each year.
Taking advantage of pension contributions could increase employee retention while also helping you manage your tax liability. However, the rules around tax and pension contributions are complex, so it is important to seek professional advice.
Get in touch
If you want to explore the most tax-efficient ways to manage pension contributions in your business, then please do get in touch with us at DBL Asset Management.
Email enquiries@dbl-am.com or call 01625 529 499 to speak to us today.
Please note
This article is for general information only and does not constitute advice. The information is aimed at individuals only.
All information is correct at the time of writing and is subject to change in the future.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
The Financial Conduct Authority does not regulate tax planning.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.
Workplace pensions are regulated by The Pensions Regulator.