Hold the Salary; Up the Benefits
Group benefit plans can be a financially cost-effective way for you to attract and retain employees. And group benefits aren’t just a good fiscal decision for you; they can also be a good decision for your employees.
Group benefits are valued by employees, in fact a recent study showed that employees may even prefer benefits over a salary raise!
Tax effectiveness is one reason that benefits are highly valued. Health and dental coverage – which is a key component of most group benefits – are a non-taxable benefit. So while some employees may pay up to 40% or more in a pay raise in taxes (depending on the earnings level), they keep 100% of the value of their health and dental group benefits.
Here’s an example for an employee who reports to work in Ontario earning a $35,000/year salary. The employer is considering a 5% pay raise for the employee versus contributing the same amount for new health and dental coverage under a group benefits plan for the employee.
By contributing the same amount to a group benefits plan for an employee versus a pay raise, you will not only save $132.44, but your employee will receive something they value. Adding a group benefits plan could help your bottom line and help ensure a happy, healthy productive employee.
A group benefits plan can be a cost – effective strategy for employee attraction and retention, and help to ensure a healthier more productive workforce.