Many employers offer their staff a range of benefits as well as salary and bonus but these are often not communicated as well as they could be. We have a number of clients who had been missing out on excellent opportunities until we helped them to clarify what was available to them. With some benefits you may have to make an active decision to join whereas with others, enrolment could be automatic.

You should check what is on offer to you (ask your HR department) and make sure that you are taking advantage of these. Typical benefits might include:

Life assurance

This is often 4 x salary. Remember that if you leave the firm, you will lose the insurance (and you might be in poor health at the time) so where you want to make sure that your family is well provided for in the event of death, it often makes sense to have some insurance outside of your employer scheme.

Pension

This could be a final salary scheme (if you are lucky!) or a “money purchase” scheme such as a stakeholder pension. It is important to understand whether the pension scheme falls under the “occupational” or “personal” pension rules. A group stakeholder scheme, for example, would be classed as a personal pension and as such, a higher rate taxpayer would need to claim the higher rate tax relief via their tax return. It doesn’t happen automatically. Many people are not aware of this and could be missing out on substantial tax rebates.

Some employers will offer a free contribution, say 5% p.a. of salary, so it almost always makes sense to join the scheme.

Quite often, employers will match any contributions you make up to, say, 5% or 10%. That's a fantastic benefit (free money basically) and usually well worth taking advantage of. This could add up to tens of thousands of pounds over a number of years.

With final salary pension schemes, it can often make sense to buy added years in the scheme, particularly if you feel that your pensionable pay is likely to increase at a good rate.

It is surprising how many people are not making the most of their employer-sponsored pension and we would generally put this down to poor communication between HR departments, employee benefits advisers and staff.

Income protection

This is also known as permanent health insurance. Big employers often give you up to 75% of salary (minus state sickness benefits) in the event of long-term illness. You may also be covered on full salary for 6 months. This is usually only on basic salary, not bonus and is taxable so it might not be enough to protect you and your family. If you do have such cover through work, in most cases it negates the need to set up a similar policy yourself.

Share Schemes

Offering employees share option schemes is an increasingly popular way of giving workers a stake in the companies they work for. In the past 10 years, an estimated £100bn of shares have been transferred to employees with companies recognising the benefits of giving employees an incentive to work harder for the good of the business.

Many large firms will offer SAYE or “Sharesave” schemes. These allow employees to save between £5 and £250 per month for 3, 5 or 7 years. Employees get a tax-free bonus if they complete the savings plan.

Employers grant employees an option at outset. At the end of the period, employees choose either to use the money saved, plus the bonus and interest, to buy shares (if buying the shares would generate a profit) or have their contributions returned plus interest (if this would give the higher return).

SAYE schemes offer huge upside potential with very minimal risk. Essentially, if the share price falls during the period, you will still get your savings back plus a tax-free bonus so the only “risk” is the fact that you could have received a slightly higher return through a conventional savings account. They are therefore one of the few “no brainers” in personal financial planning.

Other employee share schemes can involve giving free shares to employees, granting options to buy shares at a set price after a specified period of time, or allowing employees to buy shares, and matching these with free ones.

Other benefits

Increasing numbers of employers are now offering flexible benefits packages through which you can buy extra holiday, childcare vouchers, extra life insurance, home computers, critical illness cover, medical insurance for the family etc. Such schemes are fantastic because many of the benefits you buy are tax deductible, i.e. the cost comes off your pre-tax salary.

If you are an employee and are not sure whether you are making the most out of what is on offer to you, please let us know. We would also be keen to hear from employers who would like assistance in communicating the value of such benefits to their employees.