Summary: While employers are investing in benefits, most aren’t getting real value from them. There is a gap in how benefits are communicated, administered and governed, with employees reporting lower awareness and understanding of their benefits than employers assume.
Drawing on responses from 626 HR and finance professionals across the UK, Brown & Brown’s 2026 Employee Benefits Benchmarking Report, reveals where the gap between employer investment and employee experience is widest.
Benefits communication is falling short
While findings indicate that 91 per cent of employers believe their staff understand the benefits on offer, separate employee research tells a very different story. Only 36 per cent of employees say they fully understand their benefits, and just 11 per cent recall receiving regular communication about them.
Email is the dominant communication channel for benefits, used by 57.2 per cent of employers. Employee handbooks follow at 37.5 per cent. Neither is inherently wrong, but both are passive.
A one-off enrolment email rarely changes behaviour. For benefits like workplace pensions, income protection and private health insurance (products that require genuine understanding to drive uptake), passive communication isn’t enough.
If employees don’t fully understand their benefits, they’re not going to value them – and employers won’t see the retention and engagement return they’re paying for.
Only 36 per cent of employees say they fully understand their benefits
Manual benefits admin is riskier than most admit
Over one-quarter of employers (25.7 per cent) still rely on spreadsheets or manual paperwork to manage their benefits administration. A further 26.2 per cent use a mix of disconnected platforms, and the risks are showing, as 46.6 per cent of employers report at least one data error in the past 12 months due to manual processes.
Errors in benefits administration can mean incorrect insurance premiums, failed claims, payroll discrepancies and compliance gaps. The more telling figure is that 95.9 per cent of employers express confidence that they process changes accurately. Yet the data suggests that confidence is misplaced for a significant proportion of them.
Many employers are taking risks with pension governance
Auto-enrolment established the bar for workplace pensions, but governance is what maintains the standard. Yet more than one in five employers (20.8 per cent) admit they have no formal governance in place for their scheme. A further 21.4 per cent review their workplace pension less than annually, or not at all.
Without regular oversight, investment strategies drift out of alignment with workforce demographics and contributions can fall behind market expectations.
At a time when 84 per cent of jobseekers say pension quality influences their choice of employer, a poorly governed scheme is both a compliance risk and a missed engagement opportunity.
The tax efficiency most employers are missing
With National Insurance contributions rising and employment costs under sustained pressure, many businesses may be finding ways to be more efficient.
Despite this, nearly 40 per cent of employers still don’t use salary exchange for workplace pension contributions: one of the most tax-efficient ways of making pension contributions.
With this method, employees agree to reduce their gross salary by their pension contribution amount, while employers contribute that sum directly, and both parties pay National Insurance on a lower salary. Essentially, the same pension outcome costs less overall.
Research suggests that an extra one per cent in pension contributions could grow an employee’s final retirement pot by around 22 per cent over 30 years. With this in mind, salary exchange is one of the most effective ways to achieve that without increasing employer cost. Yet it remains underused.
Nearly 40 per cent of employers still don’t use salary exchange for workplace pension contributions
Employers are split on benchmarking
Just under half of employers (49.5 per cent) actively benchmark their benefits against competitors. Almost the same proportion (46.8 per cent) do not.
That means nearly half of UK organisations are making substantial benefits investment decisions without knowing how their package compares in the market they’re recruiting from.
Benchmarking doesn’t have to be a convoluted process. It can be a case of speaking to employees, reviewing sector data or speaking with an adviser.
Benchmarking provides clarity, and for decisions that impact retention and employer brand, clarity is worth the effort.
Taking action on employee benefits
Many organisations are investing in employee benefits, but not always getting the full value from that investment.
What you choose to offer is the first step, but the challenge comes from how those benefits are designed, communicated and managed day-to-day.
The organisations seeing the greatest impact aren’t necessarily the ones making the biggest investment. They are those who adopt clearer communication strategies, better administration systems, regular governance reviews and an honest look at where their package sits in the market.
When these elements come together, benefits start to work harder, shifting from a business cost to something that genuinely supports performance, retention, and long-term growth.
Actionable insights
- Ensure your employees understand their benefits: A single enrolment email isn’t enough. There is a need for regular, targeted communication.
- Manual admin is a compliance risk: Nearly half of employers experienced a data error in the past year. This makes the case for better, more connected systems.
- Check whether salary exchange is set up: It cuts National Insurance for both employer and employee with no reduction in pension contributions.
- Schedule a pension governance review: It’s necessary to reduce compliance risk and boost employee trust.
- Is your benefits package competitive for your sector and size?: You should go into your next renewal knowing whether you need to change what’s on offer.
