3 financial things to consider other than your salary when accepting a new job
The end of one year and the start of another is often a time to think about what you want to achieve and what’s important to you. So, it’s not surprising that people often think about their careers and switching jobs at this time of the year.
As 2021 draws to a close, there are other reasons why people may be looking for a switch too. The pandemic and Brexit have led to skills shortages in certain areas, providing workers with a chance to change their career path. Rising inflation also means some employees are looking at steps they can take to boost their income.
According to a report in the Guardian, almost a quarter of workers are actively planning to change employers in the next few months. When you’re searching for a new job, there’s a lot to think about, from practical consideration, like if you’ll need to commute, to the opportunity they could present to learn new skills. On the financial side of things, your focus is likely to be on one aspect: the salary.
While the income a job will provide is clearly important, there are other financial benefits an employer may offer that could prove just as valuable to you. When you’re assessing a new opportunity, here are three things to take a closer look at.
1. What pension does the employer offer?
Most employees must now automatically be enrolled in a pension. Auto-enrolment has helped more people save for retirement and can provide financial security. However, not all workplace pensions are equal, and it’s something you should review.
First, what kind of pension does your potential employer offer?
Most workplaces will offer a defined contribution pension (DC). This is where your contributions, employer contributions, and tax relief are invested to create a pot you can use to build an income in retirement.
Defined benefit (DB) pensions, also known as “final salary pensions”, will provide you with a guaranteed income in retirement, usually based on your salary and how long you are employed at the company. DB pensions are less common, but the guaranteed income can mean they’re valuable for creating security in retirement.
If it’s a DC pension, you should look at how much the employer will contribute on your behalf. The minimum amount is 3% of pensionable earnings, but some employers will offer more or increase their contribution if you increase yours. Some companies will also offer the option of pension salary sacrifice, which can reduce your tax bill while boosting your retirement savings.
If it’s a DB pension, you should review how the retirement income will be calculated and what you could expect in retirement.
2. What is the firm’s sick pay policy?
When you’re taking a new job, being unable to work due to sickness probably isn’t something you think about. Yet, if your employer offers a comprehensive sick pay policy, it can create financial security when you need it most.
Statutory Sick Pay is just £96.35 a week and can be paid for up to 26 weeks. While useful, it’s unlikely to go very far if you’re not earning an income, and this could cause financial worries. A sick pay policy that will provide your regular income, or a portion of it, for a longer period, means you can focus on getting better.
If your company does not offer comprehensive sick pay, it may be worth looking at income protection or critical illness cover to provide you with an income should you be unable to work.
An income protection policy will pay a regular income, typically a portion of your usual salary, if you’re unable to work due to an accident or illness. A critical illness policy will pay out a lump sum if you’re diagnosed with a critical illness that’s named in the policy.
Even with a comprehensive sick pay policy, you may still want to consider these options. They could provide you with more freedom and security. You should ensure that they complement what your employer offers, which could mean you need to pay lower premiums. For example, if you choose a longer deferred period for an income protection policy because you know you can rely on sick pay for six months, your premiums are likely to be lower.
3. Does the employer offer life insurance?
Life insurance can be difficult to think about. It would pay out a lump sum to your family, or nominated person if you pass away during the term. It can provide peace of mind that your loved ones would be financially secure if the worst should happen.
Some employers take out group life insurance to provide their employees with this security. It can be a valuable benefit to working at a certain company and may mean you no longer need to take out a life insurance policy yourself. Make sure you understand the level of cover that is provided and whether it suits your family’s needs. If this is a benefit offered, make sure you fill in any necessary paperwork.
Changing jobs can mean your finances change too. It’s worth taking some time to look at the impact it could have on your financial plan, from how much to place in investments through to your retirement goals. If you’d like to discuss your financial plan, please contact us.
Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.