Understand Your Benefits Package
Landed yourself a great new job with a sweet benefits package? Nice work!
Now whilst you settle into your new role and work out how to work the coffee machine, you should also take some time to digest exactly what’s on offer. Here’s a rundown of some of the most common benefits on offer:
Salary sacrifice schemes
A salary sacrifice scheme means giving up some of your wage, so your pay packet is going to be slightly lighter at the end of each month. In return, though, your company will give you a non-cash benefit such as a company car, increased pension contributions or childcare vouchers. This can help you to boost your savings or save money on expensive purchases. They’re non-compulsory and should not involve undergoing a credit check.
Season ticket loans
If you commute into a big city for work – London in particular – then your company may offer a loan to help you cover the costs of transportation. The cost of an annual season ticket paid for upfront will usually save a significant chunk of money when compared to paying for a monthly or weekly ticket. Companies that offer season ticket loans will buy the ticket upfront at the annual cost, and charge you the cheaper monthly rate.
One of the more confusing employee perks can be share options – the right to own a little piece of the company that you work for, in the form of company shares. In the simplest terms, share options are the right to buy a certain number of shares in the future at a discounted rate.
This is known as a ‘vesting period’ – which essentially just means the time you have to wait before buying the shares at the rate offered (often the current market value at the time you sign the contract). The catch is that you can’t buy the shares and then immediately sell them on for a profit. Instead, you’ll be ensuring that when the company is eventually sold, you get a small slice of the proceeds.
The obvious catch is that there’s never any guarantee your shares will increase in value. That’s why many financial specialists recommend seeking financial advice before exercising share options. We certainly don’t suggest going ahead until you’re sure that you understand what the scheme involves.
If share options have you scratching your head, then perhaps you’ll prefer good old-fashioned company discounts. Not much to explain here: your employer will partner with other companies, often in the local area, to offer discounts on things like shopping or restaurant grub. The one thing to remember here is that a discount only saves you money if you were planning on buying something anyway: it’s not an excuse for a spending spree.
The government mandates that all employers automatically enrol their employees into pension schemes and pay a minimum of 2% (rising to 3% from April next year) into the pot. However, many companies will offer to match higher amounts – which is to say, if you agree to make a higher contribution from your own salary, they will pay in an equal amount. As long as you can afford the slight hit to your pay packet each month, this is essentially free money – so go for it!
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