Inflation beaters? How work perks can help your budget

Loren Rose Graafland thought once she had her first baby she would take a chunk of time off work and build her family. 

In reality, she returned to work at Kiwibank in January this year, one of many New Zealand workers grappling with the rising cost of living and with a hole in her earnings after taking maternity leave.

It wasn’t just the regular pay packet that helped Rose Graafland make the choice to return to work. She says the benefits offered by her employer were the trigger to head back to work - although not straight to the office.

She’s working three-days-a-week, with one day in the office which she says is the “best of both worlds”. The flexibility of being able to come back only three days and with two at home was very attractive, Rose Graafland says.

Kiwibank topped up her government-paid parental leave to her full salary for 26 weeks while she was off and it paid a one-off baby bonus of $1000 to new parents.

Now that Rose Graafland is back working she is eligible for four-weeks paid baby bonus leave from the bank which she can use in the year after returning to work. Through her employer she also has Southern Cross health insurance and life insurance along with serious illness insurance, with the option of adding family members to her health insurance at a discounted rate.

One of the best staff perks for working at a bank is lower interest rates. Rose Graafland doesn’t currently have her mortgage with Kiwibank, but says she could take advantage of this staff benefit when her home loan is up for renewal.

“They've also recently introduced a supportive leave policy to cover things like sickness, bereavement, things like that, which in these winter months has been invaluable. We pick up all kinds of germs at daycare, so not to potentially use up all your sick leave, or having to take unpaid leave, to care for your child is really important,” Rose Graafland says.

In an environment where everything is getting more expensive, anything you don’t have to pay for is a win and employers are recognising benefits are desirable to entice new recruits or ensure workers come back.

A Goldman Sachs report from June says in an inflationary environment a key tool for employers to use is upgrading compensation and also benefits.

It says inflationary pressures are likely to remain and its corporate partners are beginning to implement benefit solutions to "help employees gain increased clarity and confidence in their financial lives". Through these optimised benefits, employers can demonstrate they understand the pressure employees are facing in the current climate, it says.

We can already see the impact of the pandemic on our household finances.

Statistics NZ March quarter data showed New Zealanders spent nearly every dollar of their income, and the ratio of saving to disposable income approached zero. Household net worth also fell in the March quarter, dropping by $42.3 billion or 1.7%.

Petrol prices are high, grocery prices have leapt and the most recent consumer price index inflation number landed at a 32-year high of 7.3% for the year to June.

Greg Thompson, national director of business advisory services and tax at Grant Thornton, says the buzz around benefits is tied to retaining workers in an inflationary environment.

“You maybe haven’t done [benefits] before because it was a pain, dealing with fringe benefits tax and the different tax rates and things like that. But now employers might be thinking, ‘actually, what needs to be done?’”

Fringe benefit tax is levied where a worker gets a benefit from their employer like use of a work vehicle when they’re not working. That cost is paid by the employer, and fringe benefit tax takes in a decent wedge of tax income, more than $607 million in the year to June 2021, with that predicted to rise for the year ended 2022.

Accountant Terry Baucher says two key work benefits for workers are a car and parking. 

“In an inflationary environment those two are really handy. But putting a value on it is really difficult.”

What is the value of a free work car, or parking? Parking is very tricky to quantify, Baucher says, but the Automobile Association has a guide which steers you in the right direction for your free wheels. It estimates the cost of running a small car for a year is $5000 and if that small car runs for about 14,000 kilometers a year your fuel bill could be about $2100 annually. So it’s a decent saving if you don’t already own a car and have that sunk cost, to have a work one for your use. Note: this AA article was written in November 2021.

But there are other benefits which aren’t taxed. 

For example, staff at supermarkets get a discount to shop in store. Countdown offers its workers a 5% discount when they shop where they work, and a further 5% discount on all fresh and own-brand products. A spokesperson for the supermarket says it often hears from its workers about how much they value the discount, "especially given the inflationary environment we are in".

Foodstuffs says it doesn’t have blanket staff in-store discounts due to its co-operative structure but those who are directty employed by the corporate Foodstuffs business get benefits including private healthcare, discounts on things like fuel and gym memberships, training and education programmes, free parking and subsidised cafes.

Thompson says because these discounts take the cost back to wholesale they aren’t captured by fringe benefits tax.

The benefits are flowing thick and fast with even your streaming needs catered for. TVNZ now advertises on its job ads a binge perk, a new broadband and mobile benefit so you’ll will be able to work from anywhere "and be free to stream and binge watch with no limits”.

The state-owned broadcaster also offers new employees $350 to help set up a home office, a $350 annual wellbeing allowance and discounted Southern Cross health insurance.

Bonita McCarthy, head of reward, property and HR operations at Vodafone, says benefits are an integral part of rewarding employees, retaining its team and attracting new talent.

The telco offers its staff fully paid health insurance, sick and bereavement leave from when an employee starts and higher KiwiSaver employer contribution rates and generous parental leave.

“Benefits will only achieve this intent if they are valued by employees, so earlier this year we asked our people whether our current offerings were still fit for purpose. As a result of this feedback, we’re looking to co-create a new approach to benefits that will offer greater choice for employees, which aligns with our promise of freedom.”