Download pdf - SPOTLIGHT ON BENEFITS UNITED KINGDOM … · 2012 Spotlight on Benefits United Kingdom MBM % Yes This statistic shows the percentage of surveyed employers who responded positively

SPOTLIGHT ON BENEFITSUNITED KINGDOM December 2012

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2012 Spotlight on Benefits United Kingdom MBM

Contents

1. Overview......................................................................................................................................... 2 1.1. About 2012 Benefits Survey Report – United Kingdom ....................................................... 2 1.2. If You Have Questions ......................................................................................................... 3 1.3. Confidentiality ...................................................................................................................... 3

2. Participant List ................................................................................................................................ 5 2.1. Alphabetical List ................................................................................................................... 5 2.2. By Industry ......................................................................................................................... 11

3. Background – Benefits in the United Kingdom ............................................................................. 17 3.1. State Benefits..................................................................................................................... 17

3.1.1. Retirement Benefits................................................................................................ 17 3.1.2. Death Benefits........................................................................................................ 18 3.1.3. Short-term Disability Benefits ................................................................................. 19 3.1.4. Long-term Disability Benefits.................................................................................. 19 3.1.5. Medical & Dental Benefits ...................................................................................... 20 3.1.6. Maternity Benefits................................................................................................... 20

3.2. General Market Practice .................................................................................................... 22 3.2.1. Retirement.............................................................................................................. 22 3.2.2. Death Benefits........................................................................................................ 23 3.2.3. Short-term Disability Benefits ................................................................................. 24 3.2.4. Long-term Disability Benefits.................................................................................. 24 3.2.5. Medical Benefits ..................................................................................................... 24

4. Statistical Results ......................................................................................................................... 26 4.1. Defined Benefit Plans......................................................................................................... 26 4.2. Defined Contribution Plans ................................................................................................ 27 4.3. Group Personal Pension.................................................................................................... 28 4.4. Stakeholder Pension.......................................................................................................... 28 4.5. Life Insurance .................................................................................................................... 29 4.6. Short-term Disability Benefits............................................................................................. 29 4.7. Long-term Disability Benefits ............................................................................................. 30 4.8. Medical Plans..................................................................................................................... 30 4.9. Annual Leave ..................................................................................................................... 30 4.10. Maternity ............................................................................................................................ 31 4.11. Travel ................................................................................................................................. 31 4.12. Company Cars ................................................................................................................... 32 4.13. Other Benefits .................................................................................................................... 32

5. Definitions..................................................................................................................................... 34

© 2012 Mercer LLC December

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1

Overview

1.1. About 2012 Benefits Survey Report – United Kingdom

Mercer has collected information on benefits from a range of organisations operating across the United Kingdom. 228 organisations provided data to the 2012 Benefits Survey. This is the first launch of the benefits survey, which is a survey with data collection taking place all year round. Participants are listed in Section 2 in alphabetical order and also by industry. The contribution of these organisations is acknowledged as invaluable in the production of this report. Section 3 provides general information about benefits in the United Kingdom – state and market practice on supplementary benefits – to give context to the statistical survey results delivered in Section 4. Section 4 provides a summary of the key results of the benefits survey, where the median value (50th percentile) is used to demarcate prevalence and values. Results are presented for simplicity in standard format tables containing the following information.


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% Yes This statistic shows the percentage of surveyed employers who responded positively to this question. It is relevant for some questions and not for others; where not relevant, it is left blank.

Mean

The sum of values is first calculated and then is divided by the number of observations. Unlike the median, the mean will be impacted by extreme low and high results. The mean itself is not an actual observation from the sample and in that sense does not necessarily reflect a typical practice.

25th Percentile (Q1) After calculating the median, the first quartile is the mid-point of the lower half of the sample. The first quartile is the score below which 25% of the cases fall and above which 75% fall.

50th Percentile (Median) The median is the mid-point of a range of figures. It is calculated by sorting all the values into ascending order then locating the value above which 50% of the scores fall and below which 50% of the scores fall.

75th Percentile (Q3) After calculating the median, the third quartile is the mid-point of the upper half of the sample. The third quartile is the score below which 75% of the cases fall and above which 25% fall.

Unless otherwise stated, local currency is used. In order to facilitate your understanding of the benefits information provided in our surveys, a glossary containing definitions of benefits and statistical terms is provided in Section 5.

1.2. If You Have Questions If you have questions regarding the survey or the report, call us or e-mail us at:

+44 20 7178 3172 Neil Hurst [email protected] +44 20 7178 5649 Oxana Nagy [email protected] +48 22 456 40 83 Anna Szczerbak [email protected]

1.3. Confidentiality To ensure the confidentiality of all data, a minimum number of observations is required in order for statistics to be displayed. Three organisations must report at least three observations for a variable in order for the mean to be displayed. Four organisations and four observations are required for display of the median. Five organisations reporting at least five observations are required to display 25th and 75th Percentiles. Where there has been insufficient data for analysis, this has been indicated with “--“. Human Resource professionals who deal regularly with surveys are aware of the variance that may exist in survey data. Data may fluctuate slightly from year to year due to changes in the participant base. It is also important to note that within a sample, a significant amount of data may be reported by one organisation. It is also possible for data to change drastically from year to year due to industry-related factors and economic conditions.


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Mercer is providing this survey information to its clients to permit them to make independent decisions regarding salaries and benefits. Because the exchange of salary and benefit information among competitors may be construed in certain circumstances as a means to facilitate an antitrust violation, Mercer has taken appropriate steps in collecting and disseminating this information in order to avoid such perceptions. The information and data contained in this report are for information purposes only and are not intended nor implied to be a substitute for professional advice. In no event will Mercer be liable to you or to any third party for any decision made or action taken in reliance of the results obtained through the use of the information and/or data contained or provided herein.


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Participant List

2.1. Alphabetical List Organisation Name Industry Name

AB Mauri Food

Accellent Medical Equipment and Supplies

Accenture High-Tech – Other or Combination

Accolade Wines Beverage and Tobacco

Actavis UK Pharmaceutical

ADVA Optical Networking Telecommunications

Aetna Global Benefits Europe Insurance – Health and Medical

Albert Browne UK Medical Equipment and Supplies

Alexion Pharma International Services Pharmaceutical

Alfa Laval Machinery

Ally Financial Finance/Banking – Other or Combination

Ammeraal Beltech Plastics and Rubber Products

Amway Europe Consumer Goods – Other or Combination

Amway UK Consumer Goods – Other or Combination

Arch Chemicals Chemical

Arch UK Biocides Chemical

Arla Foods Food

AsiaInfo-Linkage H.K. Systems UK Branch High-Tech – Other or Combination

ASM UK Sales High-Tech – Other or Combination

Atlantic Plastics Plastics and Rubber Products

Avon Cosmetics Consumer Goods – Other or Combination

Bacardi Martini Beverage and Tobacco

Bang And Olufsen UK Consumer Goods – Other or Combination

Barry Callebaut UK Food

BASF Chemical

Baxi Heating UK Machinery


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Organisation Name Industry Name

Baxter Healthcare Medical Equipment and Supplies

BE Aerospace High-Tech – Other or Combination

Beam UK Beverage and Tobacco

Bissell Homecare Overseas Electrical Equipment, Appliance, and Component

BMW Group Financial Services Finance/Banking – Other or Combination

BMW UK Transportation Equipment – Automobile

BMW UK Manufacturing Transportation Equipment – Automobile

Boeing UK Transportation Equipment – Aerospace

Boots UK Retail

Bosch Siemens Home Appliances Electrical Equipment, Appliance, and Component

BP International Oil & Gas Downstream

Bristow Group Utilities – Energy

BRITA Water Filter Systems Consumer Goods – Other or Combination

British American Tobacco Beverage and Tobacco

British American Tobacco UK Beverage and Tobacco

Britvic Soft Drinks Beverage and Tobacco

Burberry Apparel

Burger King Corporation Food

Business Connexion Services – Other or Combination

Capital Group Companies Global Finance/Banking – Other or Combination

Cargotec Machinery

Carl Zeiss High-Tech – Other or Combination

Carlsberg UK Beverage and Tobacco

CBee Europe Consumer Goods – Other or Combination

Cereform Food

Checkpoint Systems Computer and Electronic Products

Chemetall Chemical

Chiquita Brands Food

Cinetic Landis Machinery

Coca Cola Enterprises Beverage and Tobacco

Colgate-Palmolive UK Personal Care

Corn Products UK Food

Corning Telecommunications

CP Kelco UK Chemical

Danfoss Machinery

Danfoss Heat Pumps Machinery

Danfoss Randall Electrical Equipment, Appliance, and Component

Danone Food

Deere and Company European Office Machinery

DENSO Manufacturing UK Transportation Equipment

DENSO Marston Transportation Equipment

DENSO Sales UK Transportation Equipment – Auto Parts

Diageo Beverage and Tobacco


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Dr Reddy’s Pharmaceutical

Dr Reddy’s Laboratories Pharmaceutical

Elementis Chemical

Enerflex UK Oil & Gas Upstream

ESB Energy International Utilities – Energy

Estee Lauder Cosmetics Personal Care

Federal-Mogul Transportation Equipment – Auto Parts

Federal-Mogul Aftermarket UK Transportation Equipment – Auto Parts

Federal-Mogul Bradford Transportation Equipment – Auto Parts

Federal-Mogul Camshaft Castings Transportation Equipment – Auto Parts

Federal-Mogul Coventry Manufacturing Transportation Equipment – Auto Parts

Federal-Mogul Friction Products Transportation Equipment – Auto Parts

Ferrero UK Food

FIAT Industrial Machinery

Fives North American Combustion UK Machinery

Fives Stein Machinery

Foster Wheeler Energy Energy – Other or Combination

Gallaher Beverage and Tobacco

Gambro Lundia High-Tech – Other or Combination

Gardner Denver Machinery

Gates Power Transmission Consumer Goods – Other or Combination

General Mills UK Food

General Motors UK Transportation Equipment – Automobile

Getinge Medical Equipment and Supplies

Giesecke & Devrient GB High-Tech – Other or Combination

Givaudan UK Chemical

GlaxoSmithKline UK Healthcare Consumer Goods – Other or Combination

Goodyear Dunlop Tyres UK Retail

Grundfos Pumps Wholesale Distribution

H J Heinz Company Food

Halliburton Worldwide Oil & Gas Upstream

Hasbro Consumer Goods – Other or Combination

Hella HLGB Transportation Equipment – Auto Parts

Henkel Consumer Goods – Other or Combination

Herbalife Europe Wholesale Distribution

Hickson Chemical Supplies Chemical

Hilton Worldwide Hospitality/Restaurant

Hitachi Europe High-Tech – Other or Combination

Hoganas Great Britain Chemical

Honeywell Durable Goods, Miscellaneous

HR Reward Partner High-Tech – Other or Combination

ICAP Finance/Banking – Other or Combination

IKEA Retail


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IMI Cornelius Beverage and Tobacco

IMI Kynoch Machinery

Imperial Tobacco Limited Beverage and Tobacco

Imperial Tobacco UK Beverage and Tobacco

Instron – Division of ITW Machinery

Inteva Products UK Transportation Equipment – Auto Parts

Invensys High-Tech – Other or Combination

Jabil Circuit UK Computer and Electronic Products

John Dewar And Sons Beverage and Tobacco

Johnson and Johnson UK Personal Care

Johnson Controls Automotive UK Transportation Equipment – Automobile

Johnson Electric International UK Electrical Equipment, Appliance, and Component

JP Coats Consumer Goods – Other or Combination

Kallo Foods Consumer Goods – Other or Combination

Kellogg Company of Great Britain Food

Kerry Group Food

Kimberly-Clark Consumer Goods – Other or Combination

Kraft Foods Food

Kwintet UK Apparel

Lanxess Chemical

LEGO Company Consumer Goods – Other or Combination

Levi Strauss UK Apparel

Lonza Biologics Pharmaceutical

L’Oreal UK Consumer Goods – Other or Combination

Lubrizol Chemical

Magna Seating UK Transportation Equipment – Auto Parts

Manitowoc Foodservice Machinery

Mars UK Consumer Goods – Other or Combination

Mauri Products Food

Mead Johnson Nutrition UK Pharmaceutical

MeadWestvaco Consumer Goods – Other or Combination

Molson Coors Brewing Company Beverage and Tobacco

Monsanto UK Chemical

Moy Park Food

Musgrave Retail Partners Wholesale Distribution

Musgrave Wholesale Partners Wholesale Distribution

Mylan Pharmaceutical

Nestle UK Consumer Goods – Other or Combination

New Balance Athletic Shoes UK Wholesale Distribution

Newell Rubbermaid Europe Consumer Goods – Other or Combination

Norges Bank Investment Management Banking

Norgren Machinery

Novartis Pharmaceutical


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Novo Nordisk Pharmaceutical

NovoZymes UK Consumer Goods – Other or Combination

Pall Europe High-Tech – Other or Combination

PANDORA Jewellery UK Retail

Parfums Christian Dior Retail

Parker Hannifin Manufacturing Machinery

PepsiCo UK Consumer Goods – Other or Combination

Perstorp UK Chemical

PETRONAS Energy Trading Energy – Other or Combination

Peugeot Citroen Automobiles UK Retail

Pfizer Consumer Goods – Other or Combination

Philip Morris International Charles Stewart Beverage and Tobacco

Piaggio Transportation Equipment

Praxair Surface Technologies Chemical

Printpack Plastics and Rubber Products

Procter and Gamble Services Consumer Goods – Other or Combination

PZ Cussons International Consumer Goods – Other or Combination

PZ Cussons UK Consumer Goods – Other or Combination

QVC Retail

R Twining And Company Food

Ranbaxy Europe Pharmaceutical

Raytheon UK High-Tech – Other or Combination

Reckitt Benckiser Healthcare Consumer Goods – Other or Combination

Red Bull Company Beverage and Tobacco

Reichhold UK Chemical

Renesas Electronics Europe High-Tech – Other or Combination

Rockwell Automation Electrical Equipment, Appliance, and Component

Rolls-Royce Motor Cars Transportation Equipment – Automobile

Rowan Companies Oil & Gas Upstream

Sandoz Pharmaceutical

Sara Lee Coffee and Tea UK Beverage and Tobacco

SC Johnson Consumer Goods – Other or Combination

Schneider Electric Energy – Other or Combination

Shell UK Oil & Gas Downstream

Sidel UK Machinery

SITA High-Tech – Other or Combination

SKF UK Machinery

SMA Solar UK Energy – Other or Combination

Smiths Medical International Medical Equipment and Supplies

Solios Thermal Machinery

Solutia UK Chemical

STERIS UK Medical Equipment and Supplies

Storck Consumer Goods – Other or Combination


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Syfer Technology Computer and Electronic Products

TeliaSonera International Carrier UK Telecommunications

Tellabs High-Tech – Other or Combination

Tenaris Oil & Gas Upstream

Textron Transportation Equipment – Aerospace

The Coca-Cola Company Beverage and Tobacco

The Gap Apparel

The Medicines Company Pharmaceutical

The Wrigley Company Consumer Goods – Other or Combination

Thermo Fisher Scientific Medical Equipment and Supplies

Thorn Lighting UK Electrical Equipment, Appliance, and Component

TI Automotive United Kingdom Transportation Equipment – Auto Parts

TJX Europe Retail

Total System Services Processing Europe Finance/Banking – Other or Combination

Tyco Flow Control UK Oil & Gas Downstream

Unilever UK Consumer Goods – Other or Combination

Vaisala High-Tech – Other or Combination

Valspar Chemical

Vattenfall Wind Power Energy – Other or Combination

Visteon Engineering Services Transportation Equipment – Auto Parts

Volex Electrical Equipment, Appliance, and Component

Volvo Car UK Retail

Volvo Group Retail

Warnaco UK Retail

Wartsila UK Transportation Equipment

WDFG UK Retail

Western Union Finance/Banking – Other or Combination

Whitman Laboratories Consumer Goods – Other or Combination

Wrafton Laboratories Pharmaceutical

Zurich Insurance – Other or Combination


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2.2. By Industry Consumer Goods

Burberry Apparel

Kwintet UK Apparel

Levi Strauss UK Apparel

The Gap Apparel

Accolade Wines Beverage and Tobacco

Bacardi Martini Beverage and Tobacco

Beam UK Beverage and Tobacco

British American Tobacco Beverage and Tobacco

British American Tobacco UK Beverage and Tobacco

Britvic Soft Drinks Beverage and Tobacco

Carlsberg UK Beverage and Tobacco

Coca Cola Enterprises Beverage and Tobacco

Diageo Beverage and Tobacco

Gallaher Beverage and Tobacco

IMI Cornelius Beverage and Tobacco

Imperial Tobacco Limited Beverage and Tobacco

Imperial Tobacco UK Beverage and Tobacco

John Dewar And Sons Beverage and Tobacco

Molson Coors Brewing Company Beverage and Tobacco

Philip Morris International Charles Stewart Beverage and Tobacco

Red Bull Company Beverage and Tobacco

Sara Lee Coffee and Tea UK Beverage and Tobacco

The Coca-Cola Company Beverage and Tobacco

AB Mauri Food

Arla Foods Food

Barry Callebaut UK Food

Burger King Corporation Food

Cereform Food

Chiquita Brands Food

Corn Products UK Food

Danone Food

Ferrero UK Food

General Mills UK Food

H J Heinz Company Food

Kellogg Company of Great Britain Food

Kerry Group Food

Kraft Foods Food

Mauri Products Food

Moy Park Food

R Twining And Company Food

Colgate-Palmolive UK Personal Care


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Consumer Goods

Estee Lauder Cosmetics Personal Care

Johnson and Johnson UK Personal Care

Actavis UK Pharmaceutical

Alexion Pharma International Services Pharmaceutical

Dr Reddy’s Pharmaceutical

Dr Reddy’s Laboratories Pharmaceutical

Lonza Biologics Pharmaceutical

Mead Johnson Nutrition UK Pharmaceutical

Mylan Pharmaceutical

Novartis Pharmaceutical

Novo Nordisk Pharmaceutical

Ranbaxy Europe Pharmaceutical

Sandoz Pharmaceutical

The Medicines Company Pharmaceutical

Wrafton Laboratories Pharmaceutical

Amway Europe Consumer Goods – Other or Combination

Amway UK Consumer Goods – Other or Combination

Avon Cosmetics Consumer Goods – Other or Combination

Bang And Olufsen UK Consumer Goods – Other or Combination

BRITA Water Filter Systems Consumer Goods – Other or Combination

CBee Europe Consumer Goods – Other or Combination

Gates Power Transmission Consumer Goods – Other or Combination

GlaxoSmithKline UK Healthcare Consumer Goods – Other or Combination

Hasbro Consumer Goods – Other or Combination

Henkel Consumer Goods – Other or Combination

JP Coats Consumer Goods – Other or Combination

Kallo Foods Consumer Goods – Other or Combination

Kimberly-Clark Consumer Goods – Other or Combination

LEGO Company Consumer Goods – Other or Combination

L’Oreal UK Consumer Goods – Other or Combination

Mars UK Consumer Goods – Other or Combination

MeadWestvaco Consumer Goods – Other or Combination

Nestle UK Consumer Goods – Other or Combination

Newell Rubbermaid Europe Consumer Goods – Other or Combination

NovoZymes UK Consumer Goods – Other or Combination

PepsiCo UK Consumer Goods – Other or Combination

Pfizer Consumer Goods – Other or Combination

Procter and Gamble Services Consumer Goods – Other or Combination

PZ Cussons International Consumer Goods – Other or Combination

PZ Cussons UK Consumer Goods – Other or Combination

Reckitt Benckiser Healthcare Consumer Goods – Other or Combination

SC Johnson Consumer Goods – Other or Combination

Storck Consumer Goods – Other or Combination


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Consumer Goods

The Wrigley Company Consumer Goods – Other or Combination

Unilever UK Consumer Goods – Other or Combination

Whitman Laboratories Consumer Goods – Other or Combination

Durable

Honeywell Durable Goods, Miscellaneous

Bissell Homecare Overseas Electrical Equipment, Appliance, and Component

Bosch Siemens Home Appliances Electrical Equipment, Appliance, and Component

Danfoss Randall Electrical Equipment, Appliance, and Component

Johnson Electric International UK Electrical Equipment, Appliance, and Component

Rockwell Automation Electrical Equipment, Appliance, and Component

Thorn Lighting UK Electrical Equipment, Appliance, and Component

Volex Electrical Equipment, Appliance, and Component

Alfa Laval Machinery

Baxi Heating UK Machinery

Cargotec Machinery

Cinetic Landis Machinery

Danfoss Machinery

Danfoss Heat Pumps Machinery

Deere and Company European Office Machinery

FIAT Industrial Machinery

Fives North American Combustion UK Machinery

Fives Stein Machinery

Gardner Denver Machinery

IMI Kynoch Machinery

Instron – Division of ITW Machinery

Manitowoc Foodservice Machinery

Norgren Machinery

Parker Hannifin Manufacturing Machinery

Sidel UK Machinery

SKF UK Machinery

Solios Thermal Machinery

Accellent Medical Equipment and Supplies

Albert Browne UK Medical Equipment and Supplies

Baxter Healthcare Medical Equipment and Supplies

Getinge Medical Equipment and Supplies

Smiths Medical International Medical Equipment and Supplies

STERIS UK Medical Equipment and Supplies

Thermo Fisher Scientific Medical Equipment and Supplies

Ammeraal Beltech Plastics and Rubber Products

Atlantic Plastics Plastics and Rubber Products

Printpack Plastics and Rubber Products

DENSO Manufacturing UK Transportation Equipment


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Durable

DENSO Marston Transportation Equipment

Piaggio Transportation Equipment

Wartsila UK Transportation Equipment

Boeing UK Transportation Equipment – Aerospace

Textron Transportation Equipment – Aerospace

DENSO Sales UK Transportation Equipment – Auto Parts

Federal-Mogul Transportation Equipment – Auto Parts

Federal-Mogul Aftermarket UK Transportation Equipment – Auto Parts

Federal-Mogul Bradford Transportation Equipment – Auto Parts

Federal-Mogul Camshaft Castings Transportation Equipment – Auto Parts

Federal-Mogul Coventry Manufacturing Transportation Equipment – Auto Parts

Federal-Mogul Friction Products Transportation Equipment – Auto Parts

Hella HLGB Transportation Equipment – Auto Parts

Inteva Products UK Transportation Equipment – Auto Parts

Magna Seating UK Transportation Equipment – Auto Parts

TI Automotive United Kingdom Transportation Equipment – Auto Parts

Visteon Engineering Services Transportation Equipment – Auto Parts

BMW UK Transportation Equipment – Automobile

BMW UK Manufacturing Transportation Equipment – Automobile

General Motors UK Transportation Equipment – Automobile

Johnson Controls Automotive UK Transportation Equipment – Automobile

Rolls-Royce Motor Cars Transportation Equipment – Automobile

Energy

BP International Oil & Gas Downstream

Shell UK Oil & Gas Downstream

Tyco Flow Control UK Oil & Gas Downstream

Enerflex UK Oil & Gas Upstream

Halliburton Worldwide Oil & Gas Upstream

Rowan Companies Oil & Gas Upstream

Tenaris Oil & Gas Upstream

Foster Wheeler Energy Energy – Other or Combination

PETRONAS Energy Trading Energy – Other or Combination

Schneider Electric Energy – Other or Combination

SMA Solar UK Energy – Other or Combination

Vattenfall Wind Power Energy – Other or Combination

Finance/Banking

Norges Bank Investment Management Banking

Ally Financial Finance/Banking – Other or Combination

BMW Group Financial Services Finance/Banking – Other or Combination

Capital Group Companies Global Finance/Banking – Other or Combination

ICAP Finance/Banking – Other or Combination


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Finance/Banking

Total System Services Processing Europe Finance/Banking – Other or Combination

Western Union Finance/Banking – Other or Combination

High-Tech

Checkpoint Systems Computer and Electronic Products

Jabil Circuit UK Computer and Electronic Products

Syfer Technology Computer and Electronic Products

ADVA Optical Networking Telecommunications

Corning Telecommunications

TeliaSonera International Carrier UK Telecommunications

Accenture High-Tech – Other or Combination

AsiaInfo-Linkage H.K. Systems UK Branch High-Tech – Other or Combination

ASM UK Sales High-Tech – Other or Combination

BE Aerospace High-Tech – Other or Combination

Carl Zeiss High-Tech – Other or Combination

Gambro Lundia High-Tech – Other or Combination

Giesecke & Devrient GB High-Tech – Other or Combination

Hitachi Europe High-Tech – Other or Combination

HR Reward Partner High-Tech – Other or Combination

Invensys High-Tech – Other or Combination

Pall Europe High-Tech – Other or Combination

Raytheon UK High-Tech – Other or Combination

Renesas Electronics Europe High-Tech – Other or Combination

SITA High-Tech – Other or Combination

Tellabs High-Tech – Other or Combination

Vaisala High-Tech – Other or Combination

Insurance

Aetna Global Benefits Europe Insurance – Health and Medical

Zurich Insurance – Other or Combination

Nondurable (Excluding Consumer Goods)

Arch Chemicals Chemical

Arch UK Biocides Chemical

BASF Chemical

Chemetall Chemical

CP Kelco UK Chemical

Elementis Chemical

Givaudan UK Chemical

Hickson Chemical Supplies Chemical

Hoganas Great Britain Chemical

Lanxess Chemical

Lubrizol Chemical


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Nondurable (Excluding Consumer Goods)

Monsanto UK Chemical

Perstorp UK Chemical

Praxair Surface Technologies Chemical

Reichhold UK Chemical

Solutia UK Chemical

Valspar Chemical

Retail/Wholesale Trade

Boots UK Retail

Goodyear Dunlop Tyres UK Retail

IKEA Retail

PANDORA Jewellery UK Retail

Parfums Christian Dior Retail

Peugeot Citroen Automobiles UK Retail

QVC Retail

TJX Europe Retail

Volvo Car UK Retail

Volvo Group Retail

Warnaco UK Retail

WDFG UK Retail

Grundfos Pumps Wholesale Distribution

Herbalife Europe Wholesale Distribution

Musgrave Retail Partners Wholesale Distribution

Musgrave Wholesale Partners Wholesale Distribution

New Balance Athletic Shoes UK Wholesale Distribution

Services

Hilton Worldwide Hospitality/Restaurant

Business Connexion Services – Other or Combination

Other

Bristow Group Utilities – Energy

ESB Energy International Utilities – Energy


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3

Background – Benefits in the United Kingdom In this section, practices in the areas of retirement, death, disability, medical and maternity benefits provision for employees are summarized. In the United Kingdom, in the event of retirement, death or disability, benefit payments can be cumulated from 2 sources: state benefits and benefits provided by employer.

3.1. State Benefits

3.1.1. Retirement Benefits Eligibility All the UK earners from the age of 16 who are paid more than the earnings threshold, and those who are credited National Insurance (NI) contributions. Normal Retirement Benefit There are two main state retirement benefits as follows: Basic State Pension (BSP) and State Second Pension (S2P). The BSP is a flat-rate benefit. The full BSP from April 2012 is GBP 107.45 per week (GBP 5,587.40 per annum) for a single person or GBP 171.85 per week (GBP 8,936.20 per annum) for a married couple. Individuals reaching State Pension Age (SPA) on or after 6 April 2012 must have at least 30 qualifying years of National Insurance (NI) contributions. S2P is currently earnings related but is moving towards a flat-rate benefit. Benefits are aimed at lower earners, with the pension for a full career (assumed to be 44 years) being assessed as: A flat-rate pension of GBP 3,890 per annum; Plus 10% of earnings between the Lower Earnings Threshold GBP 14,700 and the Upper

Accrual Point GBP 40,040 per annum.


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Organisations with private pension plans that meet certain conditions may contract out of S2P and provide benefits through the company plan in return for reductions in NI contributions. However, the ability to contract out on a money purchase (or ‘protected rights’) basis, that is through a money purchase occupational scheme or a personal pension plan has been removed with effect from 6 April 2012. It is still possible to contract out in defined benefit final salary and career average schemes. A non-taxable pension credit is also payable for low-income people over age 60. Employee Contributions No national insurance (NI) contributions are required on earnings below Primary Earnings Threshold (PET: GBP 146 per week for 2012/2013). Twelve percent of weekly earnings are required on earnings between PET and upper earnings limit (UEL: GBP 817 per week for 2012/2013) and 2% of earnings above UEL. Rebates are given if the individual is contracted-out of S2P. Employer Contributions No national insurance (NI) contributions on earnings are required below secondary threshold (GBP 144 per week for 2012/2013). 13.8% of weekly earnings are required on earnings above secondary threshold. There is no upper limit applied. Rebates are given if the individual is contracted-out of S2P.

3.1.2. Death Benefits Eligibility Three bereavement benefits are available on the death of a spouse or civil partner. Entitlement to benefits is based on the deceased’s NI contribution record, not the claimant’s. Conditions for receiving benefits Benefits cease on remarriage, formation of a civil partnership, or cohabitation. Widowed parent’s allowance and the bereavement allowance cannot be claimed at the same time. Benefits description Bereavement payment This is a tax-free lump sum of GBP 2,000, payable if the deceased spouse had met the NI contribution conditions (or died as a result of their job) and either was not entitled to a state retirement pension or the widowed partner is under SPA at the date of death. Widowed parent’s allowance This is a taxable weekly benefit, subject to meeting NI contribution conditions, which includes a basic allowance for the surviving parent (GBP 105.95 per week (2012/2013)), and an allowance for each dependant child and additional pension, if the survivor qualifies. Bereavement allowance This is a taxable weekly benefit payable for 52 weeks after the death, provided the deceased had met the NI contribution conditions or died as a result of an industrial accident or disease. The amount depends on the survivor’s age at the time of the death, and varies from GBP 105.95 per week for 2012/2013 if 55 years or over, down to GBP 31.79 per week for 2012/2013 at age 45. SERPS is not paid in addition.


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Guardian’s allowance This is payable in certain circumstances to a person bringing up a child because one or both their parents have died. From April 2012, the weekly amount is GBP 15.55 per child.

3.1.3. Short-term Disability Benefits Eligibility All employees are eligible. Waiting period Three days of disablement need to pass before benefits begin. Conditions for receiving benefits Statutory sick pay (SSP) is not paid for specific illness or treatment, but to those employees who are incapable of work and who satisfy the conditions for payment. Benefits description SSP is payable to employees by their employers for up to 28 weeks in any period of sickness. It is paid from the fourth day of sickness. The standard rate of SSP for 2012/2013 is GBP 85.85 per week. There are no additions for dependants. For those who do not meet the qualifying conditions for SSP (that is, average salary in excess of the lower earnings limit of GBP 107 per week for 2012/2013 before the sickness), Employment and Support Allowance (ESA) may be paid, also from the fourth day of illness. Employers may be able to recover SSP they pay if they have a high proportion of their workforce sick at any one time.

3.1.4. Long-term Disability Benefits Eligibility All employees are eligible. Waiting period (period of disablement before benefits begin) For those claimants who are eligible to receive SSP, entitlement to the Employment and Support Allowance (ESA) begins after the 28th week of entitlement to SSP. If SSP is not payable, then ESA will be paid from the fourth day of sickness (see ‘Short term disability benefits’ above). Conditions for receiving benefits Those who cannot work because of ill health or a disability may be able to claim Employment and Support Allowance (ESA). This is a contributions-based benefit paid at a range of rates depending on duration of incapacity and the assessed ability to work. It gives people of working age a replacement income when they cannot work or look for work because of illness or a disability. Benefits description Employment and Support Allowance (ESA) is paid in two stages: The basic ESA will be paid at GBP 71.00 for 2012/2013 (GBP 56.25 if under 25). Potential claimants will undergo a Work Capability Assessment (WCA) which will be carried out within 13 weeks. The medical test is there to establish what work related activities the individual is capable of undertaking.


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As a result of this test, claimants will be split into two groups: The Work Related Activity Group (WRAG) – These are individuals who are identified as being

capable of some form of work related activity and will therefore be able to claim ESA at GBP 99.15 per week for 2012/2013.These individuals will be required to attend a work focused interview through the ‘Pathways to Work’ scheme. Any individual who does not attend these interviews may have their ESA re-assessed.

The Support Group (SG) – These individuals have been identified as not being able to undertake any work related activity and will therefore not be expected to attend interviews. They will have an income of at least GBP 105.05 per week for 2012/2013. For those more severe cases where it is deemed, following assessment, that the individual is indeed unable to return to gainful employment the ESA, with support component would be paid unconditionally.

3.1.5. Medical & Dental Benefits Conditions for receiving benefits Residents of EEA (European Economic Area) countries must show a European Health Insurance Card (EHIC) or form S1 from other approved countries, a passport, or evidence of being a national resident: residence permit, identity card, home health or benefits authority document with proof of residency. It should be noted that regardless of residential status or nationality emergency treatment given at primary care practices (a GP) or specifically in an accident and emergency department or a walk-in centre providing services similar to those of a hospital accident and emergency department is free of charge; also treatment for certain communicable conditions (excluding HIV/AIDS), compulsory psychiatric care and family planning are free of charge. In the case of treatment given in an accident and emergency department or walk-in centre, the exemption from charges ceases to apply once the patient is formally admitted as an inpatient (this includes emergency operations and admittance to high dependency units) or registered at an outpatient clinic unless, of course, they meet the eligibility criteria. Benefits description Depending on eligibility criteria, most treatment is free, although patients have to pay part of dental costs and prescriptions themselves. There are exemptions to charges for persons on low income, pregnant women, children and older persons. For complete clarity reference should be made to the Department of Health website. Contributions Employee contributions are included in general taxation and in NI contributions. Employer contributions are included in NI contributions.

3.1.6. Maternity Benefits Statutory maternity pay To qualify for statutory maternity pay (SMP), the person must have been employed by their employer into the qualifying week which is the 15th week before the week the baby is due; employed by the same employer without break for at least 26 weeks into the 15th week before the week the baby is due (part weeks count as full weeks); earning before tax an average GBP 107 (from 6 April 2012) a week. Subject to these, there is no lower age limit.


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SMP can start at any time between the 11th week before the week the baby is due and the latest from the day following the birth of the baby. It is payable for a maximum of 39 weeks. Two levels of benefit are payable: 90% of the average weekly earnings of the mother for the first six weeks, followed by GBP 135.45 a week (from 6 April 2012), or a rate equal to 90% of the mother’s average weekly earnings, if this 90% is less than GBP 135.45, for the remaining 33 weeks. A further 13 weeks of maternity leave may be taken. This is unpaid unless there is a contractual agreement by the employer to provide pay. Maternity allowance If a mother does not qualify for SMP, she may qualify for maternity allowance (MA). The mother must have been employed and/or self-employed for at least 26 weeks in their “test period” (66 weeks up to and including the week before the week the baby is due) – part weeks count as full weeks; and they earned GBP 30 (from April 2012) a week averaged over any 13 weeks in their test period. Statutory and additional paternity allowances If the mother’s partner is working for an employer, the partner may be entitled to two weeks Ordinary Paternity Leave (OPL) and Ordinary Statutory Paternity Pay (OSPP) under the same criteria as SMP. In addition, the mother’s partner may qualify for Additional Paternity Leave (APL) and Additional Paternity Pay (APP). APL may be taken by an employee with an employment contract. To qualify for leave, the employee must have been with the employer for at least 26 weeks by the qualifying week which is either: The end of the 15th week before the start of the week when the baby is due; The end of the week they are notified that they are matched with their child (adopting within the

UK); or The date the child enters Great Britain for the purposes of adoption (adopting from overseas). For the mother’s partner to qualify for APL they must take the time off to care for the child, and the child’s mother or adopter must: Have been entitled to one or more of the following – Statutory Maternity Leave, Statutory

Maternity Pay, Maternity Allowance or Statutory Adoption Leave or Pay; Have returned to work and ceased claiming any relevant pay. For the mother’s partner to qualify for Additional Statutory Paternity Pay they must be an employed earner. That is they must work for someone who is liable to pay the employer’s share of their class one National Insurance contributions. They must also earn at least the lower earnings limit (LEL) (GBP 107 per week for 2012/2013) for National Insurance contributions in force at the end of the qualifying week. The mother or adopter must: Have returned to work; Have stopped claiming any relevant pay, with at least two weeks of unexpired Statutory Pay

period remaining. The partner must intend to care for the child during the Additional Statutory Paternity Pay Period. Additional Statutory Paternity Pay is only payable during the mother’s 39 week Maternity Allowance, Statutory Maternity or Statutory Adoption Pay period.


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3.2. General Market Practice

3.2.1. Retirement Defined Benefit Plan Eligibility Most plans were originally open to all employees. Some employers may operate separate plans for executives. For open schemes, there is usually a waiting period of 3–12 months before one becomes eligible to join. A large number of DB schemes, particularly smaller schemes, are now closed to new members. It is estimated that only 20% of open DB schemes remain open to new members. Pensionable earnings About 40% of companies define pensionable pay as base salary only, the rest include some elements of variable pay such as shift allowances, overtime, etc. Some companies operate an offset to pensionable earnings to allow for state benefits. Normal retirement benefits A typical DB plan is contracted out of the state plan – Second State Pension (S2P), and provides a pension of two-thirds of final pensionable earnings after 40 years’ service – for example, an accrual rate of 1/60th of final pensionable earnings per year of service. Almost all plans allow part of the pension benefits to be exchanged for a tax-free lump sum, within tax authority limits. Typically, 25% of the value of the member’s benefits may be commuted as tax-free cash. Employee contributions Employees typically contribute 5%–8% towards a 1/60th scheme, reflecting the recent upward trend as a result of the increased cost of benefit provision. Members may make additional voluntary contributions. Employer contributions Employer contributions vary considerably, but around 15%–25% of pensionable earnings towards a 1/60th scheme plus additional amounts to rectify any deficit in the scheme. Defined Contribution Plan Eligibility Eligibility varies but unless the employer has an occupational pension scheme, stakeholder legislation requires employers to provide access (and a payroll deduction facility) to a designated stakeholder pension plan, which is a form of personal pension contract. The employee must be able to join no later than three months after joining the company, although the employer is not required to contribute. Employers with fewer than five employees are exempt from stakeholder requirements. The stakeholder legislation will be repealed when auto enrolment comes into force. More generally, there is usually a waiting period for participation in an employer-sponsored pension arrangement. The waiting period can be up to 12 months and the employer will still be exempt from stakeholder requirements. Waiting periods for personal pension plans are generally shorter or do not apply. Most plans are open to all employees. Plan membership must be voluntary.


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Normal retirement benefits Accumulation of contributions together with investment returns, converted to an annuity using accrued funds at retirement and either paid from the scheme or bought out from an insurance company. Form of payment An employee has the option of taking a lump sum from their accrued fund as a tax-free lump sum. The limit on the lump sum is typically 25% of the fund. The remainder of the fund must be used to provide retirement income. Provided that the individual has at least GBP 20,000 per annum in income from other sources, there are no restrictions on the amount of income that can be withdrawn. Employee contributions Employees typically contribute 2%–7% of pensionable earnings. Employer contributions Employers typically contribute 4%–12% of pensionable earnings, often age-related. Sometimes a basic rate is available with additional contributions dependent on employee contributions to the scheme.

3.2.2. Death Benefits Eligibility Most members of occupational or group personal pension plans are eligible for lump-sum death benefits as a result of the membership of the pension plan. A significant majority of employers extend this cover to non-members, although this is often at a lower level. Benefits description Pension Practically all final salary plans provide a spouse’s or civil partner’s pensions on death-in-service, while around half of DC plans now do so (either as an insured level of pension or a lump-sum payment to be used to purchase a spouse’s pension). Often dependant children’s pensions are payable as well. Under DB plans, the most common level of spouse’s or civil partner’s pension is 50% of the member’s prospective pension, but other forms are found such as a percentage of the member’s salary or accrued pension. Upon death in retirement, spouse’s and civil partner’s benefits are paid as a continuation of the member’s pension, commonly at the rate of 50% of the member’s pension before exchanging it for cash at retirement. Lump sum Lump-sum benefits are provided upon death in service by most pension plans, usually on a salary-related basis. The most common multiples provided in the private sector are three or four times the annual salary. In DC plans, the value of the fund less the cost of the spouse’s or civil partner’s pension is also usually returned. Lump-sum benefits are generally not provided in retirement, although a guarantee is often applied to pensions in payment. Employee contributions The cost of death benefits is usually part of the overall cost of the pension plan or, for DC plans, met by the employer in addition to pension contributions.


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3.2.3. Short-term Disability Benefits Waiting period (period of disablement before benefits begin) Most employers pay sickness benefits from the first day of absence, although statutory sick pay is not paid until the fourth day of sickness. Benefits description Employers pay statutory sick pay (SSP) to their employees for up to 28 weeks in any period of sickness. It is paid from the fourth day of sickness. SSP benefits are equal to GBP 85.85 per week for 2012/2013. There are no additions for dependants. For those who do not meet the qualifying conditions for SSP (that is, average salary in excess of the lower earnings limit of GBP 107 per week for 2012/2013 before the sickness), incapacity (disability) benefits are paid, also from the fourth day of illness. Employers may be able to recover SSP they pay if they have a high proportion of their workforce sick at any one time. In many cases, employers top up SSP to 100% of pay for a period, followed by 50% of pay. This typically varies by employer and employee service.

3.2.4. Long-term Disability Benefits Waiting period (period of disablement before benefits begin) Typically the waiting period is 26 weeks of absence. Benefits description The benefit provided is typically between 50% and 75% of the employee’s pre-disability salary. Benefits may be integrated with state benefits although with the welfare reform legislation, there is likely to be a move away from benefits which are fully integrated with state benefits. Benefit levels vary by industry type.

3.2.5. Medical Benefits Benefits description Medical Supplemental medical plans typically cover private hospital accommodation and NHS pay beds; theatre, surgeons’ and anaesthetists’ fees; specialist consultation fees; outpatient visits; inpatient drugs and dressings. Dental Dental plans typically provide reimbursement up to fixed limits although capitation plans, where cover is full refund but the individual has to have all treatment required done prior to joining, are also available but are not so popular in the corporate sector. The recession did not impact the dental market to the same degree as the private medical insurance one and it remains strong irrespective of coming changes to the provision of NHS dental care, which will continue to be on a charge rather than free basis.


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Vision Optical plans typically provide reimbursement up to fixed limits, depending on the nature of the treatment. This type of benefit tends to be within a cash plan arrangement for reimbursement of costs rather than a standalone plan. Companies have a statutory obligation to provide eye tests and to subsidise the cost of lenses for all VDU users. Employee contributions Usually the company is contractually obliged to pay the employee’s premium contribution. If dependants are allowed then they can be on a charge basis. Excess amount (if applicable). Often dental and vision plans are available at full cost to the employee as part of a flexible benefits programme. Premium costs paid by the company are subject to personal income tax as a benefit in kind to the employee.


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4

Statistical Results In this section, the statistical results of the survey are provided based on general industry results. Throughout the report, unless otherwise stated, results are presented for “professionals” and can be representative of broad-based plans offered across the employee population. All statistics are expressed as a percentage of all plans.

4.1. Defined Benefit Plans General 51% of plans offered by organisations are DB plans. 13% of DB plans are open to new entrants. Retirement plan is contracted out of S2P/SERPS in 32% of all plans. Retirement Age In DB plans normal retirement age is typically equal to 65 years. The earliest retirement age at which normal retirement benefits are paid without any reductions is 60. Pensionable Salary The most common elements of compensation added to base salary for the definition of the reference salary are shift payments (17% of plans), overtime payments (12%) and bonuses (11%). In 16% of plans an offset is made from reference salary for the purposes of benefit calculation. 8% of plans apply upper limit on reference salary. DB Post Retirement Death Benefits The vast majority of participating organisations offer benefits available on death after retirement. Some highlights of the results for professionals are given below. Table 1: DB Post Retirement Death Benefits Percentage of All Plans

Annuity for Spouse-partner 43%

Annuity for Dependent Children 29%

Lump sum for Spouse-partner 16%

Lump sum for Dependent Children 2%


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