Gallagher: Benefits Misalignment Costs Businesses Top Talent
Global insurance and risk management consultancy Gallagher has revealed how employee benefit preferences are shifting across generations, with clear implications for talent strategy, retention and workforce risk.
Through analysis of 65,000 UK employees, Gallagher found that young workers (aged 20-29) prioritise lifestyle benefits such as additional annual leave, whereas older employees (aged 50-59) place greater value on protection benefits, including income protection and critical illness cover.
Yet many employers are not meeting this demand, highlighting a gap between what employees expect from their benefits package and what organisations currently provide. For senior leaders, segmenting benefits by life stage and strengthening core protections can enhance EVP, improve benefit uptake and optimise total reward spend.
Top employee benefits across generations
Just 4% of young employees name income protection as an important perk, compared to 12% of older employees – yet less than a quarter (24%) of employers offer income protection to their workforce.
“As people move through their lives and careers, it's natural that their priorities change,” said Alistair Dornan, Gallagher's Benefits & HR Consulting Division's Managing Director of UK Benefits. “Early career employees often place greater value on lifestyle-led benefits such as holiday trading or gym membership. As responsibilities grow, protection benefits – particularly income protection and critical illness cover – become increasingly important.”
Holiday trading was the most popular benefit across all age groups, with uptake rising from 18% among employees aged 20-29 to 23% among the oldest demographic. Employees aged 30-39 (19%) and 40-49 (22%) also named holiday trading as their number one perk. For senior leaders, this underscores the strategic value of scalable, choice-led time benefits within the EVP.
Beyond this consistent preference, benefit choices fluctuate by life stage. Employees in their 20s prioritise dental insurance (12%) and travel insurance (9%). Critical illness cover resonates more with those in their 30s (19%) and 40s (22%), while employees in their 50s shift towards private medical insurance (19.52%), reflecting growing demand for comprehensive health protection later in their careers.
Dental insurance remains a steady third choice for most age groups, appearing in the top three for all but the 40-49 cohort – signalling sustained appetite for accessible, high-utility health benefits.
Key takeaways for leaders
With holiday trading named the most popular flexible benefit across the board, the data highlights ongoing employee demand for flexibility – particularly in how time off is managed.
The appeal of this benefit strengthens across career stages, climbing from 19% among 20-29-year-olds to 24% in the 50-59 bracket. Leaders should calibrate benefits to life stage while preserving choice – expanding flexible leave options and pairing them with targeted protection benefits as personal and work commitments grow.
