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.

Employee benefits

Two-thirds of healthcare workers threaten to quit without better benefits

‘Significant’ gap between what employers and employees expect from health benefits

Half more likely to choose an employer offering health benefits – poll

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.

Sign up to our weekly round-up of HR news and guidance

Receive the Personnel Today Direct e-newsletter every Wednesday

Email(Required) OptOut From time to time, we will send you emails about selected products, events and services from Personnel Today and OHW+ - but you can choose to opt-out at any time. If you do not wish to receive these emails, please tick this box.NameThis field is for validation purposes and should be left unchanged.

Δdocument.getElementById( "ak_js_2" ).setAttribute( "value", ( new Date() ).getTime() );

/* = 0;if(!is_postback)var form_content = jQuery(this).contents().find('#gform_wrapper_129');var is_confirmation = jQuery(this).contents().find('#gform_confirmation_wrapper_129').length > 0;var is_redirect = contents.indexOf('gformRedirect() );} ); /* ]]> */

 

Compensation and benefits opportunities on Personnel Today

Browse more compensation and benefits jobs