Rising benefit costs are the top issue (64%) influencing UK employers’ benefit strategies in 2025, up from 57% in 2023, according to research by Willis Towers Watson (WTW).
Its 2025 Benefits trends survey, which surveyed more than 5,500 employers in over 50 countries, including 327 UK employers, also found that other top concerns include competition for talent (59%), expectations for an enhanced employee experience (44%) and the cost of living (37%).
As the cost of UK medical care continues to grow, respondents said they face greater challenges in delivering their strategy in areas such as health benefits (40%), wellbeing programmes (28%), and retirement benefits (23%).
To address this, 57% plan to reallocate or rebalance spend in the next three years, while 67% are looking to expand benefit choice. Three-fifths (60%) plan to tackle high costs by adopting navigation solutions to support employees using benefits, realign spend across benefits (57%) enhancing value or switch to better-value providers across health, retirement and risk benefits (52%).
Respondents are also looking to improve the priority areas of maximising value, mental health, health benefits, financial wellbeing and family support over the next three years. Many plan to increase communication and use nudges and navigation approaches to enhance the employee experience, while others will regularly review provider performance, including employee feedback.
Andy Leighton, director, health and benefits at WTW, said: “After a long period of high benefits inflation and in the face of a possibly weakening economy, employers are taking a step back and looking to focus on what drives real value for employees and the business. That means targeting support and spending on the benefits that matter most, enabling personalisation and helping employees make better decisions.
“Organisations are facing more pressure than ever to deliver the right benefits strategy. Finding innovative solutions for old and new challenges and reshaping benefits to signal purpose and values is a good start. There is still a long way to go to address these pressure points, but employers seem to be going in the right direction to focus on what matters most to their employees.”
