SUMBITTED BY

SUMEDHA PANDEY
(16IN662)
Analysis and Evaluation of the Market

MARKET PROFILE
 The UK is the 5th biggest economy in the world (by GDP), with a GDP of $ 2.629
trillion.
 Population: 63.7m (30% below the age of 25; 29% above the age of 55). Average life
expectancy at birth: 80.4 years.

MARKET AT A GLANCE
 The UK has widespread social security system. For the 2015/16 financial year, total
government expenditure was around £731bn – 20% of which will be State pensions,
18% health services and 15% welfare.
 The State pension has been the source of largest single outgoing for the Exchequer.
State pension age is on rise: women, previously use to qualify at 60, now are being
moved to equivalence with men (65) and they both will rise to 66 in 2020, 67 in 2028
and to 68 in the 2040s.
 Around 35% of working adults are in an occupational pension scheme, however only
few remain “defined benefit,” offering expected income. Almost 47% of employees in
the UK have neither a work pension nor a personal pension plan.
 The state’s auto enrolment scheme – compelling companies to offer a pension plan to
employees – has already begun for the largest employers and will cover all
organisations by 2018.
 Life insurance via employer currently applies to only 20% of employees.

POPULAR EMPLOYEE BENEFITS PRODUCT AVAILABLE

IN THE MARKET

Pension
Most pensions nowadays are 'defined contribution' pensions. At retirement employee will have a pot
of cash which can be used to buy annual income schemes like annuity. The main reason for getting a
pension through work is that the employer will often contribute too.
Share Schemes
This type of scheme will normally involve employers giving employees free shares in the company,
or matching the shares which they bought from the company. Such scheme mostly is restricted to
certain level of employee, or necessitate a definite number of years of employment
BENEFITS THAT PROVIDE FOR ILLNESS OR INJURY

Sick Pay
Most employees get £88.45 a week (2015- 2016) after their first 4 days off sick. This is known as
Statutory Sick Pay, and covers them for first 6 months off as a result of illness or injury.

Income Protection (IP)

Income Protection pays a percentage of an employee's salary each month (typically 60-80%) as a
regular income, if they cannot work because of long-term illness or injury. Getting Income Protection
provided by employer is known as Group Income Protection, in this often medical conditions that an
employee has prior to the policy are covered.

Critical Illness Insurance (CII)

Critical Illness Insurance provides employee with a tax-free lump sum if they're diagnosed with any
one of a number of specific medical conditions. To get the benefit, the employee must have one of the
conditions on the list, and they normally must survive a minimum period of time after they're
diagnosed (usually between 14 and 28 days).

Life Insurance
Life Insurance (also called Death in Service) pays a tax-free lump sum if an employee dies, to provide
support for the people who depend on them financially.

Childcare Vouchers
Childcare vouchers are deducted from employee's salary before tax and National Insurance as 'salary
sacrifice'. These vouchers can be used to pay for childminder, preschool, a nanny, or nursery till
child's 15th birthday.

Car Allowance
Employee gets some extra payment so they can buy a car for their work. Quite a few employers
provide mileage allowance, which means employee will get a certain amount for each mile driven for
company purpose.

Gym Membership
Employers provide employees a free gym membership; they may also offer a discounted rate at a
local gym or gym chain. This is a taxable benefit, so employees will have to pay a little bit towards it.
Parallel Reference – Comparison of the
products / benefits of the foreign market
with that of India
UNITED KINGDOMS
In general workers are not
Working hours allowed to work more 48
hours per week. Workers can
opt out and opt in back at any
time to this limit, with a
minimum notice period of
seven days.
There are currently eight
Public holidays permanent public and bank
holidays in England and
Wales
Employees have a right of
Minimum holiday 5.6 weeks of paid holidays
entitlement annually. The maximum
statutory limit is that of 28
days.
Employees who are not able
Illness and injury of to report to work because of
employees illness or injury for four or
more uninterrupted days are
entitled to receive statutory
sick pay (SSP), if they meet
the mandatory conditions.
Weekly rate of SSP as of
now is £88.45. The ceiling
limit of such entitlement is
28 weeks' SSP.
INDIA
Normal weekly limit is of 48
hours, the daily hour timing
ranging from eight to nine
hours.
Holidays range from four to
ten days depending upon the
region.
Employees are entitled to 12
to 21 days of holidays
annually.
Employees who are covered
under the ESI Act can claim
sickness or disablement
benefit (which the
government bears).
For employees who are
earning ₹21,000 or monthly,
the employer contributes
4.75 percent and employee
contributes 1.75 percent, total
share 6.5% percent. State
government's share is 1/8th
and that by central
government is 7/8th.
 All pregnant women
Maternity rights employees are permitted to
both:
 26 weeks' ordinary
maternity leave (OML).
 26 weeks' additional
maternity leave (AML).
Parental eligible employees Indian employment law does
Parental rights can have unpaid time off.
Qualified employee can take rights.
18 weeks of unpaid parental
leave for each child.
Employees acquire few
Statutory rights created statutory rights after a certain are allowed to an employee
period of continuous service who has worked
with an employer. These
include the rights to:
 Appeal for a flexible
working arrangement
(after 26 weeks' service).
 Family-related leave
(mostly after 26 weeks'
service).
 Not be unjustly dismissed
(after two years).
One week's notice period is
Notice periods given to the employee who
has worked for more than
two weeks but less than two
years. After which, he has the
right to receive an additional
week's notice for each
completed year of job, the
The Maternity Benefit
Amendment gives maternity
leave to every woman for a
minimum of 80 days before
the expected date of delivery,
up to maximum period of 12
weeks. The employee
receives her salary during the
statutory maternity period.
not provide for parental
Following statutory benefits
continuously with an
employer :-
 Retrenchment
compensation as per
the ID Act is payable
to employees who
have been employed
for a unremitting
period of at least 240
days.
 Gratuity amounts are
payable for employee
who has worked for
at least 5 years with
an organization.
 Leave entitlement is
dependent on the
employee's span of
service for the year.
In general, the notice period
for dismissal is of one month.
maximum limit is of 12
weeks.
 Post two years of continuous After a certain continuous
Severance payments employment with a single period of employment
employer the employee is employee must be paid
entitled to a statutory definite termination benefits
redundancy payment (SRP). like:
 Leave encashment.
SRP is calculated according  Gratuity payment.
to statutory formula based on  Any other amounts due
the employee's age, salary under the employment
and length of service. contract.
Termination benefits are
calculated according to
employee's salary and length
of service.

Employees and employers The EPF Act provides for the

Social security make social security following three schemes:
contributions contributions by making a  Provident Fund Scheme
payment to NICs, the rates (PF Scheme).
are as follows:  Pension Scheme.
 Employee Deposit Linked
 Employees pay 12% NICs Insurance Scheme (EDLI
on their earnings between Scheme).
GB£155 and GB£827 per
week. Earnings over The PF Scheme is applicable
GB£827 per week are to all employees earning a
subject to 2% NICs. salary of not more than
INR15,000 per month,
 Employers pay 13.8% unless:
NICs for earnings above The statutory rate of
GB£156.01 per week for contribution under the PF
employees who are not Scheme is 12% of the
part of a contracted-out statutory defined wages,
pension scheme, and which is paid by both the
10.4% NICs for all employer and employee (that
earnings above is, the total payable is 24%).
GB£156.01 for employees A portion of the employer's
who are part of a contribution (equating to
contracted out pensions 8.33%.
scheme
Under the EDLI Scheme, the
employer must contribute
0.5% of basic wages. The
wages on which this amount
is calculated is capped at
INR15,000 per month for all
employees.
Understanding of the Issue
 The cost of health care is increasing rapidly while the benefits provided by the
employer for the same are not at par with the rapidly increasing costs. This has been a
major issue.

 Employers in the U.K. place employee retention as top priority, yet time and again
they have underestimated the power of benefit in attaining employee satisfaction.
Only 23% of employers think that their workers are happy with their benefits.

 The popularity of voluntary benefits has not arrived at the identical level in the United
Kingdom as in US, 52% of U.S. workers said they lay importance to the option of
purchasing voluntary benefits from their employer; but only one in five U.K.
employees who receive workplace benefits conveyed wish to go for a wider voluntary
benefits from the workplace.

 Employee satisfaction with their job is very less. They report lower levels of
satisfaction despite the benefits being provided by the employer.

 The recent economic changes have caused some restlessness in the U.K, especially
among older workers. About a third of all workers over the age of 51 and between 41-
50 years old said they were “extremely concerned” about rebuilding their retirement
nest egg after the recent economic changes.

 There is an Achilles heel in U.K. retirement planning. A vast majority of U.K.

workers have begin to realize that they might not have sufficient funds for their 20+
years in retirement.

Recommendations for Indian Market

 Employers who wish to differentiate themselves and attract the most skilled workers
could broaden their benefits offerings to include more disability insurance as well as
private medical insurance.
 More voluntarily benefits should be introduced to for the employees, such benefits are
important for most employees and is an important factor.

 A majority of employees are anxious about and are unprepared for retirement, companies
should come up with retirement planning services and financial education as a benefit
option.

 Presenting a wider collection of benefits or making basic benefits more obtainable may help
employers reach their number one benefits objective.