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More than half (55%) of employers with 0-49 employees would consider introducing other employee benefits as part of the auto-enrolment process.
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71% of employers would be receptive to discussions on easily implemented Group Life options.
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91% of employers thought that Group Life would cost more than 1% of salaries, with 9% assuming the cost would be more than 5% of salaries.
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Perceived expense (42%), lack of understanding (24%) and low employee value (17%) are the most common reasons for not offering Group Life Assurance.
A survey of small business employers (with 2-49 employees) for Canada Life Group Insurance has found that more than half (55%) are prepared to consider other employee benefits when implementing pensions auto-enrolment. With an estimated 1.08 million businesses of this size due to enrol after June 1st 2015, this potentially translates as 594,000 businesses that are open to discussions on introducing other employee benefits into the workplace.
From June, companies with 49 or fewer employees will begin automatically enrolling them into workplace pensions: however, almost three in ten employers (29%) with less than 50 staff have not started preparing for this. At the same time, 18% do not currently offer Group Life Assurance to any members of their staff, highlighting the untapped potential for this employee benefit among smaller businesses.
Of the small businesses that already offer Group Life cover, the most popular reason for doing so is that it is an attractive benefit for employees (33%). A quarter (24%) offer this benefit to protect or support their employees, while one in five (20%) say it fits with their paternalistic or caring company culture. 18% use Group Life provision as a recruitment or retention tool.
Employers admit to not knowing much about Group Life Assurance, but cost and simplicity are key drivers
The three most common reasons that sub-50 employers do not offer Group Life cover are:
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it is perceived as an expense the business cannot afford (42%),
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employers don’t know much about it (24%), and
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the belief that staff do not understand or value it (17%).
This runs alongside a lack of understanding of Group Life Assurance among the employers themselves. One in ten (10%) small business employers have no knowledge or awareness of Group Life cover, while 40% admit to knowing little about it. Over a quarter (28%) believe they know what it is but are not sure of the cost or the value to their business.
91% of small business employers believe Group Life Assurance costs would be more than 1% of their payroll, with 45% thinking it would be over 3%: in reality, it typically costs less than 1%.
The size of the employer’s business also affects the factors that dissuade them from buying Group Life cover – cost was most important factor for over 50% of employers with 2 to 4 employees, while among those with 20 to 50 employees, over a third (34%) mentioned a lack of time or resources.
Over half of sub-50 employers interested in an easy-to-implement Group Life Assurance product
When offered a simple, low cost (£4-£8 per employee) Group Life Assurance product with minimum administration, 52% of small businesses without cover in place expressed an interest.
Group Life doesn’t only support employees and their families financially but also through wider support, such as bereavement and probate helplines. Almost two-thirds of small business employers (62%) said they would be concerned by the impact an employee’s death would have on their family. 60% said the same about the impact it would have on them personally and 55% worried about the effect it would have on other employees.
Paul Avis, Marketing Director, Canada Life Group Insurance commented on the findings:
“After a year of undertaking and reviewing SME research we are 100% confident that a simple, inexpensive level of Group Life cover, considered alongside every auto-enrolment pension discussion, is a great way for organisations to augment their pensions work.
“Our research leads us to believe that, if this option is properly presented, employers can see that the cost of Group Life cover and the benefits, for them as well as their employees, are very attractive. Smaller businesses often have more of a family feel and there is concern about the impact of an employee’s death on their dependants and on the organisation as a whole.
“Simplicity and ease of implementation are clearly important considerations for employers too. A short conversation about Group Life benefits with the pension’s adviser can fulfil an important requirement for staff retention and attraction. There is no doubt in my mind that the war for talent has raised its head again, and with every employer about to offer a pension scheme, organisations need to think about how they differentiate themselves and their benefits packages. Group Life is a great starting point.
“Presenting Group Life as a simple and inexpensive benefit is a massive opportunity for the Group Risk industry, as 1.08m new to benefit discussions start from June 1st. It seems to me that this is the day that the world of benefits changes. As pensions provision becomes the norm rather than the exception, Group Life has the opportunity to become the “exceptional” benefit.”
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