Firms can help boost the financial wellbeing of their employees by providing them with access to low cost, low polluting new cars through a well-planned and cost-effective salary sacrifice car scheme, when other schemes may prove to be too stressful or too expensive.
That’s the view of Tamworth-based, car benefits and fleet management specialist Fleet Evolution, which says that salary sacrifice cars can provide the perfect answer for employees who need the mobility but do not have the pay levels necessary to fund a new car through other financial arrangements, such as Personal Contract Purchase (PCP).
On the eve of Financial Wellbeing Week 2018, which starts on Monday, February 19, many employees are reported to be finding their personal finances very stretched and that financial stress is impacting on their capabilities at work.
According to new research* by financial education provider, Nudge, which surveyed 205 UK employers representing more than 1.5m employees, borrowing and managing debt will be the main financial wellness driver for employees for 2018.
Fleet Evolution says that a salary sacrifice car scheme can provide a low-cost, stress-free solution to employee financial wellbeing, as well as opening the door to new car ownership for many employees for the first time.
Analysis of the Fleet Evolution fleet reveals that 82% of employees who have taken a car through the scheme had never had a new car before. Typically, they were driving used cars of up to 10 years old which were far more polluting and liable to suffer expensive breakdowns than new models – which only added to the employee’s financial stress.
Fleet Evolution managing director Andrew Leech believes that a salary sacrifice car scheme not only helps boost employee financial well being, but also helps remove the stress associated with sourcing and running a car.
“Under a car salary sacrifice scheme, all the stress involved in running the car is removed. The key features of our salary sacrifice solution include all servicing and repair costs, road fund licence, fully comprehensive insurance, corporate discounts and no deposit.
“So, for £200 a month a driver can access a new model like a Mini with no additional costs other than fuel, or for £300 a month they can have an all-electric Nissan Leaf with no conventional fuel costs.
“We handle all the administration and our buying power allows us to acquire the vehicles at highly attractive front end prices which we pass on to employees, but which they would never be able to access in their own right.
“We also remove all the stress caused by the unexpected repair, servicing or MOT bills often associated with older cars and for which many employees have to resort to payday lenders to successfully resolve,” he said.
Leech also believes there has been a complete misunderstanding in the corporate world, and especially in the provision of corporate benefits, that salary sacrifice has now been priced out of the employee benefits equation.
In fact, nothing could be further from the truth. Of the 3,000 new models currently available on the Fleet Evolution database, less than 5% have seen a price increase since Government introduced new salary sacrifice tax rules in April 2017.
“In the overwhelming number of cases, there has been little or no increase in the amount that employees pay for their new cars, and we are pleased that we have clarity from Government that cars will continue to feature as a valuable employee benefit going forward.”
Leech added: “Car salary sacrifice schemes remain an extremely valuable benefit to employees due to their convenience, ease of use, absence of upfront payments and value for money. They also genuinely promote the uptake of less polluting, more environmentally friendly cars.
“As a result, they provide stress free, low cost motoring for the majority of employees, many of whom have never be able to afford to drive a new car before, at a time when financial wellbeing is at the forefront of many employees’ minds,” he said.
*The Financial Wellness Playbook 2018 report is available here http://www.nudge-global.com/FinWellPlaybook
Andrew Leech, Managing Director, Fleet Evolution