Employees prefer extra holiday or savings investment instead of cash rewards – PwC

MOST employees in the West Midlands would take extra holiday and invest in long-term savings plans instead of cash rewards if offered an extra £500 to spend on benefits, new research has shown.

The survey of 218 employees in the region by PwC also revealed that 37% would prefer to purchase extra annual leave over other new workplace benefits such as discounted private healthcare and subsidised gym membership.

Only a fifth (20%) would opt to take a discretionary bonus award as extra pay, revealing a preference among West Midlands employees for tax efficient savings. A similar number would choose to spend their bonus on five days’ extra annual leave from work, while almost one quarter (24%) said they would put the money in their pension. This latter point, PwC said, showed that when it came to variable pay most workers were balancing short-term consumption with longer term financial planning.

However, the study found the importance of receiving cash over benefits increased when employees were offered the opportunity to exchange 5% of their pay for a new workplace benefit.  In this scenario two thirds (67%) of employees surveyed said they would wish to maintain their cash rather than sacrifice 5% of their existing salary for any additional benefits.   

PwC said that with pensions and savings plans proving popular among respondents overall, the survey suggested that people did recognise the need to save for the long-term. However, few would give up a portion of their existing salary for any other benefit, suggesting that they had little room for manoeuvre within their existing reward packages.

David Wignall, partner and director of human resources at PwC in the West Midlands said: “Despite record low inflation, many people are still feeling the squeeze and they value benefits that will save them money. Employers in the West Midlands need to understand their people and their diversity to design a reward programme that takes account of individual preference.

“What is interesting is that employees are more likely to sacrifice discretionary pay such as a bonus for additional benefits and that funding additional annual leave ranks as one of the most popular ways of using such a windfall.”

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