According to Exploring the Impact of Employee Benefits on Startup Growth, a report from Howden Employee Benefits, nearly three-quarters (73%) of UK startups plan to revamp their employee benefits programmes. This signals a growing recognition that employee benefits will be essential for recruitment, retention, and long-term business success.

The report, based on research amongst decision-makers in UK startups, highlights how employee benefits are increasingly viewed as vital business tools:

• 46% of startup leaders identify benefits as critical to recruitment and sustained business success
• 33% report challenges in attracting and retaining talent, placing additional pressure on benefits to differentiate their employer brand

The Future of Benefits in 2025

• 47% of startups plan to expand Private Medical Insurance (PMI) and mental health support. The strains on the NHS and extended waiting times are making PMI an attractive option for businesses wanting to ensure employees have timely access to healthcare services
• 42% aim to enhance workplace pensions. In 2025, financial security will remain top of mind for employees. Some startups are investing in better pensions to meet the growing demand for retirement planning and to ensure greater financial security for employees
• 35% intend to introduce gym memberships or lifestyle discounts. With wellbeing becoming a strategic focus, startups are introducing benefits that address both physical and mental health
• 34% are exploring Group Life Assurance. Affordable and impactful, this benefit ensures that employees and their families have financial support in the event of unexpected loss

Currently, the top three benefits provided by startups are workplace pensions (80%), PMI (41%), and mental health support (38%), but the next 12 months are set to redefine this landscape.

Mental health: a continued priority

In 2025, mental health will remain a pressing concern for businesses. Nearly 60% of startups are prioritising initiatives like Employee Assistance Programmes (EAPs), counselling, and mental health first aid training. Startups are also using technology to offer wellbeing apps and mindfulness programmes, which are affordable and effective ways to support employees.

Supporting employees does not have to cost the earth either. National campaigns like Mental Health Awareness Month and Pensions Awareness Week provide free resources employers can integrate into their benefit strategies, increasing their impact without adding significant costs.

Ensuring timely healthcare access with Private Medical Insurance (PMI)

Many startups are focusing on PMI to ensure employees have prompt access to healthcare services. Long NHS waiting times for treatment and diagnosis are behind this growing trend.

Waiting times for appointments are higher than they were pre-COVID. In October 2024 the waiting list stood at 7.54 million cases – consisting of approximately 6.34 million individual patients waiting for treatment. Around 3.10 million of these have been waiting over 18 weeks[i].

Offering PMI can help employees get better quicker, boosting health and wellbeing, reducing absenteeism and improving productivity. For startups with fewer employees this can be vital.

Salary sacrifice: a win-win for startups and employees

Following the Autumn budget announcement of a hike in National Insurance, startups will be seeking ways to make savings. One option is salary sacrifice. By implementing salary sacrifice, employers can save 15% on Employer NICs on employees’ pension contributions, helping offset some additional costs whilst making a positive contribution to their employee’s retirement outcomes.

Adapting to employee expectations

The workplace of 2025 will also be shaped by employees who expect inclusivity, flexibility, and support. Recognising these shifts, 25% of startups are introducing diversity-focused benefits such as enhanced parental leave, fertility support, and paid leave for cultural or religious observances.

Evolving strategies for scaling startups

As startups mature, their benefit strategies must evolve too. Early-stage businesses often rely on equity options and the excitement of innovation to attract talent. However, scaling companies must offer comprehensive benefits that address employees' diverse needs.

A phased approach – starting with foundational benefits like pensions and PMI and gradually expanding to include lifestyle rewards and diversity initiatives – ensures startups can manage costs while staying competitive.

Preparing for 2025

As the New Year unfolds, UK startups must see employee benefits not just as perks, but as strategic tools for growth and resilience. By investing in comprehensive, meaningful benefits, businesses can attract talent, enhance employee wellbeing, and thrive in an increasingly competitive environment.

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