Comprehensive employee benefit services for businesses
Below is a summary of Moore Kingston Smith Financial Advisers’ employee benefit services. Contact Employee Benefits Consultant, Paul Beck, on 020 7566 4031 or pbeck@mks.co.uk for more information regarding our employee benefit services.
Pensions including auto-enrolment
Pensions are compulsory under auto-enrolment regulations. A good pension scheme is an excellent tool for employee retention and reward. Schemes where the employer contributions are higher than the statutory minimum, of course, have the competitive edge.
Often seen as complex and confusing, pensions should fit the specific requirements and demographics of each organisation. A reliable benchmarking review against sector and market is a good first step.
Choosing the right structure is key, as is getting impartial guidance on the investment options, which applies to both employer and employees. If employees need help with alternative options, they should get specialist financial planning advice. A good pension consultant can also give guidance on legislative issues.
Pension contributions are a tax-deductible expense for the employer. The employee usually receives tax relief on their contributions. National insurance relief may also be available for both employer and employee if pension contributions are paid by salary sacrifice.
Group life assurance (also known as group death in service)
In the event of an employee’s death, this pays a lump sum to beneficiaries, usually their spouse or children. It is either a fixed monetary amount or a multiple of basic salary. It is set up under a discretionary trust, so the sum assured is paid outside the probate system. This means it is not liable to inheritance tax.
Premiums are a tax-deductible expense for the employer and a non-taxable benefit in kind for the employee.
Group income protection
In the event of long-term incapacity following illness or injury, the employee receives a continuing income. It takes over from an organisation’s standard sick pay arrangement. It pays a percentage of the employee’s salary monthly for a specific duration or until a certain age. It can also cover pension and national insurance contributions.
It can include an absence management service and rehabilitation support during the employee’s recuperation. The benefit is paid gross to the employer, with the employee then paid via the PAYE system, minus tax and national insurance contributions.
Premiums are a tax-deductible expense for the employer and a non-taxable benefit in kind for the employee.
Group critical illness
In the event of a serious, life-threatening illness, an employee receives a tax-free lump sum – either a fixed amount or a multiple of their salary. The payment is triggered when an employee survives for a specified period. This is regardless of the employee’s ability to continue working or recovery duration.
Each insurer defines the medical conditions covered which include the most serious conditions, such as cancer, kidney failure and heart attack. Employers can choose to include extra conditions.
Premiums are a tax-deductible expense for the employer and a taxable benefit in kind for the employee.
For group life assurance, group income protection and group critical illness, unless otherwise specified, no medical evidence is required up to a specified limit – the free cover limit. Large-value free cover limits are available even for small memberships and underwriting is required for cover above this limit.
The cost of premium depends on the level of cover, employee age profile, location and industry. For schemes with fewer than ten members, it is calculated on an age-rated basis, meaning the risk rating is different for each member. Larger schemes work on a unit-rated basis and the risk rating is the same for each member.
An employee assistance programme (EAP) is often provided as a no-cost additional benefit for the above services.
Group private medical insurance
This covers the associated costs of private medical treatment in the UK. Employers can tailor the product to make it as comprehensive as possible, covering a wide range of GP-referred medical treatments.
A choice of underwriting is available, affecting whether pre-existing health conditions are covered. The cost of premium is usually calculated on an age-rated basis, meaning it increases as a member ages. Additionally, membership size can affect the premium rates, with larger schemes sometimes obtaining lower rates. The employer can tailor cover levels to meet their requirements and budget.
Premiums are a tax-deductible expense for the employer and a taxable benefit in kind for the employee.
