Voluntary Benefits: The Zero-Cost Retention Tool

What Voluntary Benefits Actually Are (And What They Are Not)

The terminology around employee benefits is notoriously imprecise. Core benefits, flexible benefits, voluntary benefits, optional benefits: in practice, these terms get used interchangeably, which muddies strategic thinking and makes it harder for HR leaders to build programmes that work.

Let us be precise. Voluntary benefits are employer-arranged but employee-funded. The employer's role is to negotiate access, typically leveraging the collective purchasing power of their workforce to secure better rates than employees could obtain individually. The employee then chooses whether to participate and, if so, pays for the benefit from their own salary. There is no employer cost beyond administration.

This is fundamentally different from core benefits, which are employer-funded (pension contributions, life assurance, basic private medical) and effectively compulsory. It is also different from flexible benefits, where employees make choices within an employer-funded pot. Voluntary benefits sit outside the salary cost entirely.

Understanding this distinction matters enormously in 2026, and the reason is straightforward: employer National Insurance Contributions rose to 15 per cent in April 2025, with the lower earnings threshold simultaneously cut from £9,100 to £5,000. The full-year cost of that change is now landing in this financial year's P&Ls. Adding a £500 salary increase to retain a valued employee now attracts £75 in employer NICs at the new rate. Offering the same employee access to £500 worth of voluntary benefits costs the employer nothing in employer NI at all.

That arithmetic alone has refocused attention on voluntary benefits across UK organisations of all sizes.

The Business Case: Numbers Worth Knowing

The evidence base for voluntary benefits as a retention tool has strengthened considerably. A Willis Towers Watson survey found that 76 per cent of employees who are given a choice in their benefits would recommend their employer as a good place to work. Research compiled by Hooray Health & Protection shows that 39 per cent of UK employees would leave their current employer for better benefits elsewhere, even without a pay increase.

Consider that figure alongside this one: recruitment and retention are the top two people challenges for UK employers in 2026, according to Ciphr research involving 300 HR professionals. Voluntary benefits sit at the precise intersection of both problems.

The CIPD's 2026 Reward Survey, drawing on responses from more than 1,000 UK reward and HR decision-makers, offers a bracing challenge to the sector. Twenty-two per cent of UK employers offer benefits with no defined objectives at all. Only 33 per cent of those who do set objectives say their benefits fully meet them. A quarter of the profession is spending money on benefits programmes without knowing whether those programmes are working. That is a significant strategic gap, and voluntary benefits, with their clear commercial model, zero employer cost, and trackable uptake metrics, offer a straightforward solution to part of that problem.

Seventy-seven per cent of UK employers do link their benefits to at least one objective; the most common are retention (44 per cent) and engagement (37 per cent). For those employers, voluntary benefits deserve far more prominence in the total reward mix than many currently give them.

What Types of Voluntary Benefits Are Employees Actually Using?

The UK voluntary benefits market has broadened considerably in recent years. The most common categories in employer programmes currently include:

Health and protection. Health cash plans remain the most popular voluntary health benefit, offering employees a way to claim back costs on dental, optical and physiotherapy treatments. Dental insurance, critical illness cover, and income protection top-up policies are also widely offered. Notably, from 6 April 2026, new HMRC exemptions now apply where employers reimburse employees for DSE eye tests and VDU glasses, extending the range of tax-efficient options.

Lifestyle, leisure and retail. High-street discount programmes, employee vouchers, retail cashback schemes, and access to deals and discounts from major UK retailers are among the most visible and most used voluntary benefits. They are particularly powerful for lower and middle earners, where the effective real-terms saving is meaningful against monthly budgets. According to Zest's 2026 employee benefits survey of 2,000 employees, high-street discounts rank highly among the most demanded benefits for this year.

Financial protection. Personal accident insurance, legal advice services, will writing, and identity protection policies are increasingly offered as voluntary add-ons. Mortgage advice services are another growing category, particularly valued by employees in higher cost-of-living locations.

Family and childcare. Childcare support, whether through employer-facilitated childcare information services or access to discounted nursery schemes, continues to feature in voluntary programmes, particularly in sectors with higher proportions of working parents.

Wellbeing and fitness. Corporate gym membership deals, discounted mental health apps, and employee assistance programmes accessed on a voluntary or supplementary basis sit within this category. An accessible wellbeing hub that surfaces all available voluntary options in one place significantly improves uptake rates.

The common thread across all of these is group purchasing power. Employers negotiate preferential rates by aggregating employee demand, giving individuals access to products and services at prices they could not obtain alone.

The Uptake Gap: Why Communication Is the Real Challenge

Here is the uncomfortable truth about voluntary benefits programmes: most of them underperform, not because the benefits are wrong, but because employees do not know they exist or do not understand how to use them.

Research from SHRM and cited by ExtensisHR found that 70 per cent of employees say they are more likely to stay with an employer who offers voluntary benefits. Yet only 49 per cent of those who are offered voluntary benefits actually take advantage of them. That gap between stated preference and actual behaviour is almost entirely a communication failure.

HR leaders too often treat the launch of a voluntary benefits programme as the job done. It is not. Benefits communication needs to be treated with the same rigour as any internal marketing campaign. That means regular communications across multiple channels, plain-English explanations of what each benefit does and how much it saves, accessible online enrolment, reminders at enrolment windows, and manager briefings to amplify the message.

A thoughtfully designed benefits package is only valuable if employees know it exists, understand what it offers, and feel confident enough to use it. The operational infrastructure matters too. If employees have to navigate multiple portals, phone helplines, or opaque paper forms to access benefits, take-up will be low regardless of how generous the offer is.

The growth of digital HR platforms that centralise benefits access has been a genuine enabler here. Where employees can log in to a single platform and see their full suite of voluntary options, with savings clearly displayed and enrolment completed in a few clicks, uptake improves substantially.

Voluntary Benefits and the April 2026 NIC Context

The post-NIC-rise environment has forced a rethink of total reward strategy across the UK. But the analysis should go beyond simply viewing voluntary benefits as a way to offset NIC costs. They are a distinct and genuinely valuable pillar of employee reward in their own right.

Here is the fuller picture. The employer NIC increase has made employers more cost-conscious about salary-based benefits. Meanwhile, employees are still navigating elevated living costs, even as headline inflation has eased. Many employees are actively looking for ways to stretch their pay further; voluntary benefits, with their group-rate savings on everyday spending, directly address that need without requiring any pay increase.

This creates a rare alignment of employer and employee interests. Employers want to retain talent without increasing payroll costs. Employees want more value from their relationship with their employer without needing to lobby for a salary review. A well-designed voluntary benefits programme, communicated properly and made easy to use, serves both objectives.

Understanding benefits eligibility rules and enrolment windows is a practical consideration for HR teams implementing or expanding voluntary benefits. Clear eligibility criteria, promptly communicated, reduce friction and improve the experience for employees at all levels.

Building a Voluntary Benefits Programme That Works

For HR leaders ready to take this seriously, the approach is not complicated, though it does require deliberate thinking.

Start with objectives. What are you trying to achieve? Retention in specific roles or locations? Recruitment competitiveness in a tight talent market? Financial wellbeing for lower-paid employees? Greater engagement from a specific demographic? Objectives drive selection. Without them, you end up in the 22 per cent that the CIPD identifies as benefits-without-purpose.

Then audit your workforce. What are the demographics, family profiles, earning levels, and life stages of your employees? A workforce of 25-to-35-year-olds with young families will value different voluntary benefits than a workforce of 50-to-60-year-olds thinking about retirement. The voluntary benefits that drive uptake are those that feel relevant to real life, not those that look impressive on a list in a benefits booklet nobody reads.

Choose a technology platform that does not make employees work hard to access their benefits. The platform should surface benefits clearly, show savings in pounds, make enrolment frictionless, and give HR teams the usage data they need to measure impact. The online platform experience is not a secondary consideration. It is often the difference between a voluntary benefits programme that gets ignored and one that employees genuinely value.

Build a communications calendar. Not a one-off launch email. A sustained campaign of reminders, case studies from real employees (with permission), savings calculators, and clear calls to action that runs throughout the year.

Review annually. The Benifex Big Benefits Report notes that 79 per cent of UK employers have increased benefits spend over the last year, and 84 per cent report that benefits provision is directly driving productivity and business growth. Those numbers suggest the investment is working for most. But measuring it requires defined metrics from the outset.

Why This Matters Now

Nearly one in three UK employers plan to expand their voluntary benefits offering by 2027, according to survey research cited by Christensen Group. The direction of travel is clear.

But expansion without strategy risks replicating exactly the problem the CIPD identified: more benefits, no objectives, no measurement, no evidence of impact. The employers who will get the most from voluntary benefits in 2026 and beyond are those who treat them as a serious commercial tool, not a tick-box exercise.

Recruitment and retention pressures are not going away. Employer NIC costs are not going away. Employee expectations of their employer are, if anything, rising. Sixty-two per cent of UK employees prioritise benefits when choosing an employer, according to Globacare's 2026 survey.

Voluntary benefits will not solve every people challenge on their own. They are one component of a total reward strategy that also includes pay, culture, development and flexibility. But as a component that costs employers nothing to operate while delivering measurable value to employees, they deserve to be treated with considerably more strategic seriousness than most HR teams currently give them.

For further information on how to build a voluntary benefits programme that delivers measurable results, visit Each Person or explore how zero cost benefits work in practice.