The rising cost of providing employee benefits is focusing the minds of employers, as businesses grapple with economic uncertainty and greater pressures on budgets, research has argued.
The 2025 Benefits Trends Survey from benefits advisory firm and broker WTW has also concluded that, as a result, companies are turning to smarter spending options, a sharper focus and using benefits as a strategic tool to drive engagement, retention and purpose.
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Rising benefit costs were the top issue for nearly two-thirds (64%) of the 5,500 employers polled globally, including 327 in the UK, up from 57% reported in the same survey in 2023.
Other top concerns included competition for talent (59%), expectations for an enhanced employee experience (44%) and cost of living (37%).
As the cost of medical care continued to show double-digit growth in the UK, employers faced greater challenges in delivering their strategy in key areas, such as health benefits (40%), wellbeing programmes (28%), and retirement benefits (23%), said WTW.
In the next three years, 57% of employers said they planned to reallocate or rebalance spend.
Additionally, 70% were looking to expand benefit choice. A majority (60%) planned to tackle high costs by adopting better navigation solutions to encourage take-up of benefits, realigning where and what they spend on benefits (57%), enhancing value, or switching to better-value vendors across health, retirement and risk benefits (52%).
“After a long period of high benefits inflation and in the face of a possibly weakening economy, employers are taking a step back and looking to focus on what drives real value for employees and the business”, said Andy Leighton, director of health and benefits at WTW.
“That means targeting support and spending on the benefits that matter most, enabling personalisation and helping employees make better decisions,” he added.
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