You shouldn’t underestimate the value of employee perks
PERKS from employers can be very valuable benefits and are well worth having. Certainly they should not be rejected, especially if there is nothing to pay for them. However, there is a danger if you rely on them too much.
An example of this is Death in Service Benefit. Where this applies, it can vary from between two to four times annual salary. It usually only applies to basic salary so often excludes bonuses, overtime and benefits but nevertheless a valuable benefit. It is not usually medically underwritten, so if you have any health issues which would make personal life assurance costly, this is even more valuable.
The risk of relying on this as core family protection is that it is only paid for death in service. The benefit ceases if you leave employment for whatever reason, be it resignation, redundancy, dismissal etc. Any new employment may not provide the same level of benefit or any benefit at all. If there have been any medical problems you may not be able to get personal life assurance, or it may be costly to obtain it.
Even if the benefit does apply in the new employment, four times salary is only four years income. If you are leaving a spouse and children this is unlikely to be enough. The benefit is valuable but should be regarded as a supplement to and not a substitute for family protection.
The same situation applies to Permanent Health Insurance (this replaces your salary if you have a longterm illness), a valuable benefit but again lost when employment ceases.
Medical Insurance is slightly different as many providers allow you to transfer to a personal policy if employment ceases, so this at least can be continued after leaving.
Employer pension schemes vary considerably, but the basic rule is that the pension is preserved and is not lost on leaving employment although the employer will no longer be paying into it. The pension can be left where it is, but ensure that any changes of address are advised to the pension administrator, or it can be transferred to a private pension. Whether this is the best course of action is another matter, but the option is there. This certainly requires specialist advice.
High taxation has eroded the value of car and fuel benefit, so losing the company car may not be so financially traumatic. In fact, in many circumstances, it may be better to forego these benefits and just claim expenses for using your own car for business purposes.
In the past, it was not unusual for a person to be with the same employer for the whole of their working lives. This is no longer the case, and it is typical to have several employments. The benefits are important and therefore you should try to preserve these as you change jobs, but is not always possible. At the very least put basic family protection in place and use the perks to supplement them.
With Alan Kendrick, Independent Financial Adviser Oakwood Insurance Consultants and Financial Services Tel: 01778 341658