Businesses change. They grow, acquire other companies and reorganise responsibilities. Employees retire or move to new employers, and the knowledge they hold can leave with them.
For one HWWA Consulting client, the 14 years since we began advising them in 2012 have brought all of these changes. Its workforce has grown from approximately 900 employees to around 1,300, partly through a series of acquisitions.
Throughout that period, we have remained a constant source of advice and practical support for the company’s workplace pension and Group Life Assurance arrangements.
The position when we were appointed
When we began advising the company, attitudes towards workplace pensions were very different.
Before automatic enrolment applied to the business, a former CFO did not want the pension scheme to be actively publicised. Employees were told that it was available, but they were not particularly encouraged to join.
Today, the opposite approach applies. Eligible employees are automatically enrolled and must take action if they want to opt out. The plan is also promoted, for example, through employee webinars. This reflects not only a change in legislation but also a significant change in how workplace pensions are regarded by a new generation of business leaders.
The company was also experiencing difficulties with its Group Life Assurance arrangements. It had been dealing directly with a very large and well-known insurer but was struggling to obtain the support it needed.
The business was also paying substantially more for the insurance than necessary.
We conducted a full market review and achieved an immediate premium saving of 26%.
A complicated benefit covering less than one fifth of the workforce
The company had grown partly through acquisitions. Employees joining from different businesses had retained varying life assurance entitlements, resulting in 10 separate categories of cover.
Despite the complexity of the arrangement, the number of insured employees was much lower than the company’s total workforce. Just under 19% of employees were covered.
Some insured employees received a benefit of twice their salary, while others received three times their salary. Many employees had no employer-provided life assurance at all.
The scheme was difficult to administer and did not provide a consistent benefit across the workforce.
Improving and extending the cover
Over a series of pre-renewal meetings, we discussed how the Group Life Assurance arrangements could be improved.
Rather than treating each renewal as a purely administrative exercise, we used these meetings to review the design of the benefit and consider whether it continued to meet the company’s needs.
Over time:
- The number of different benefit categories was reduced.
- Cover of two or three times salary was increased to four times salary for more employees.
- Life assurance was extended to previously uninsured employees once they had completed a qualifying period of employment.
- The administration required from the employer was reduced.
- The overall cost of the insurance was kept under control.
Today, almost all of the company’s approximately 1,300 employees are insured, many times the number covered when we first became involved.
Perhaps the most striking result is that the total cost of providing this much wider cover is broadly similar to the cost of insuring the much smaller group of employees covered in the early years.
Discussions are continuing about whether the company should extend the benefit further by providing life assurance from an employee’s first day of employment.
More than a market review
Our work with the company has included regular market reviews, with another review about to begin at the time of writing.
However, our role extends well beyond comparing insurance premiums.
We have:
- Discussed and reviewed the appropriate design and level of cover.
- Helped simplify a scheme that once contained 10 different categories.
- Discussed the correct use of trusts.
- Helped address historic trust arrangements where the company had several trusts in place but could not initially locate the relevant documentation. We arranged for a lawyer to advise the business.
- Prompted the appropriate contacts for membership information ahead of renewals and market reviews.
- Kept track of important renewal and policy dates.
- Helped the employer manage a number of death claims.
- Acted as a point of contact with the insurer during emotionally demanding periods for the company and the people affected.
Supporting an employer through a death claim is very different from conducting a market review. At such a difficult time, the company needs one point of contact, an adviser who understands the cover, knows the claims process and can help move matters forward sensitively.
Retaining knowledge when people change
When we first started advising the company, we dealt mainly with two contacts. We still work with two principal contacts, but we now have regular involvement with three other members of staff as well.
Recently, another change in personnel resulted in much of the company’s internal knowledge about its employee benefits leaving with one particular employee.
Once the new person responsible for the benefits found our details, we were able to explain:
- What insurance cover was in place.
- Which employees were covered.
- How the claims process worked.
- The important dates that needed to be observed.
- The history behind the existing arrangements.
The individual responsible for the benefits had changed, but the knowledge had not been lost because of our involvement. We had retained it through our long-term relationship with the company.
The results
Over 14 years, our work has helped the company achieve:
- An initial Group Life Assurance premium saving of 26%.
- An increase from just under 19% of the workforce being insured to almost all employees receiving cover.
- An improved benefit of four times salary for more employees.
- Fewer insurance categories and simpler administration.
- A broadly similar overall premium despite a substantial increase in the number of insured employees.
- Practical and sensitive support with death claims.
- Continuity of knowledge through several personnel changes.
- Ongoing pension and Group Life Assurance support as the workforce grew from approximately 900 to 1,300 employees.
The value of long-term employee benefits advice
A successful market review can produce an immediate saving. However, the full value of an employee benefits adviser is often demonstrated over a much longer period.
After 14 years, we understand how this company’s pension and Group Life Assurance arrangements have developed, why previous decisions were made and how acquisitions and personnel changes have affected the benefits.
When key employees moved on, we remained.
We retained the historical knowledge, understood the cover and were able to help new contacts take responsibility without having to reconstruct years of decisions and documentation.
Employee benefits should develop as a business changes. A long term adviser can provide the continuity needed to make sure they do.
Could your employee benefits be improved?
If your workplace pension or Group Life Assurance arrangements have become complicated, cover only part of your workforce or rely too heavily on the knowledge of one employee, HWWA Consulting can help.
We provide independent advice, market reviews and ongoing practical support to help employers improve their benefits, control costs and reduce administration.
Contact us to arrange an initial conversation about your existing arrangements.