Employers urged to rethink benefits strategy as adequacy and equity gaps persist 

UK employers are modernising their benefits packages, but low pension defaults, uneven access to health cover and limited financial wellbeing support risk undermining long-term workforce resilience. The finding comes from a report from Hymans Robertson, which draws on a survey of 500 UK corporate finance and pensions decision-makers and additional insight from 32 corporate clients.  

The report – titled Employee benefits 2026: trends and employer priorities and published in February 2026 – shows that more than half of surveyed employers now use master trusts for defined contribution (DC) pensions, with contract-based plans also common and single-employer trusts now rare. 

However, contribution levels remain modest. The report shows that 84 per cent of employers set employee default contributions at between 3 and 5 per cent, and two in three default total contributions at 10 per cent or less. 

The findings also suggest that increasing default contributions or introducing auto-escalation to the maximum contribution level could lift the likelihood of a moderate retirement income from less than one in three to more than one in two.   

Salary sacrifice is almost universal, but only 27 per cent of employers share some or all of their National Insurance savings with employees, and just 7 per cent share the full amount. With National Insurance relief on employee pension contributions due to be capped at £2,000 from April 2029  

From a workplace wellbeing perspective, low pension defaults and limited savings support may have implications for financial security later in life. The report notes that fewer than one in five employers (19 per cent) provide access to alternative savings vehicles such as a workplace ISA, despite growing evidence that many UK households have limited emergency savings. 

Private medical insurance (PMI) remains widely offered, with only 9 per cent of employers not providing it. However, access is not universal. While 57 per cent provide funded PMI to all employees, 34 per cent restrict eligibility by grade or seniority.  

The report warns that linking access to job level may create equity risks, particularly as health needs do not correlate with seniority. Three in ten employers now offer health cash plans as a more cost-effective way of broadening access.  

Group income protection (GIP) is also widely used, but the design varies significantly. More than half (53 per cent) provide GIP to all staff, while 31 per cent restrict access, often linking eligibility to pension enrolment or length of service. Sixteen per cent offer no GIP at all.  

Only one in three employers include the cost of employer pension contributions within their GIP policy. Around a fifth of employers also reported that their sick pay policy does not cover the full deferral period before GIP starts, potentially leaving employees without income during long-term absence. For UK employers, these design choices have direct implications for employee wellbeing, particularly for lower earners and part-time workers who may be more exposed to income shocks. 

Group life assurance remains a cornerstone benefit, with 88 per cent of employers offering cover to all employees. Four times salary remains the most common level of cover, set by 57 per cent of employers. However, flexibility is limited. Only 41 per cent allow employees to change cover levels, and just 28 per cent offer spouse cover, potentially limiting inclusivity for diverse family structures. 

Interest in critical illness cover (CIC) is growing. In 2023, more than 900,000 employees were covered under group CIC policies, a 22 per cent increase on the previous year. CIC is often offered on a voluntary or flexible basis and can provide lump sum payments of between one- and five-times salary, or up to £500,000. 

Financial wellbeing: a retention lever underused 

Financial wellbeing support is now widespread, with just 3 per cent of employers offering none of the eight core forms of support identified in the report. However, most provision focuses on low-cost options, such as employee discounts (78 per cent), educational materials (72 per cent) and webinars (69 per cent).  

More personalised support is less common. Only 47 per cent provide access to a financial adviser and just 31 per cent offer longer-term coaching. The report highlights a clear expectation gap. Research cited in the findings shows 47 per cent of employees want better financial wellbeing support, yet only 31 per cent of employers plan to enhance provision. Crucially, 61 per cent of employees say better support would make them more likely to stay with their employer.   

A strategic wellbeing issue 

Summarising the findings, Hannah English, head of DC corporate consulting at Hymans Robertson, writes that employers are operating under rising cost pressures and regulatory change, but small, well-chosen adjustments can improve fairness, resilience and long-term security.  

For UK organisations, the message is clear: benefits strategy is no longer simply about cost control or market benchmarking. Pension adequacy, equitable access to health protection and meaningful financial wellbeing support are central to workforce engagement, retention and long-term health. 

As cost pressures continue in 2026, employers that align benefits design with fairness and financial resilience may be better placed to support both organisational performance and employee wellbeing.