Why Employee Benefits Fail to Address Employees’ ‘Hidden Tax’

The world has changed enormously and in fundamental ways, affecting the world of work and what is expected from employees, who face their own challenges as salaries fail to keep up with the cost of living. Yet employee benefits do not address these issues, so South Africans are left carrying a “hidden tax” of cognitive overload, financial stress and disengagement.

“Organisations are asking people to produce more, adapt faster, and carry a heavier cognitive load than they were three years ago,” says Alex Cook, CEO of fintech company Wealthbit.

He cites the World Economic Forum’s 2025 Future of Jobs Report, which found that 40% of employers globally expect to cut back on staff in areas where artificial intelligence can automate tasks, while 53% of leaders are focused on increasing productivity. This means companies expect fewer people to do even more.

Four out of every five South Africans worry about money most of the time, and 82% say it affects their focus, energy and motivation at work, according to the Wealthbit 2025 Financial Stress Report*.

Employers pay for this in absenteeism and presenteeism at a cost of R250 billion per year and replacement costs of 50%–200% of annual salary.

“Employees who understand how to manage their money are more likely to engage with retirement planning, make informed medical aid choices, and access employee assistance programmes (EAPs) support before crisis point,” says Cook.

The most common employee benefits, as well as how well they meet expectations, are listed below:

1. Medical aid: Most formal employers offer medical aid, though only about 15% of South Africa’s population is covered by medical aid. The premiums of most medical aids rose 9.3%-12.8% in 2025, about three times the inflation rate, which means either employers or employees are absorbing these increases, adding to the pressure they are already under. Medical aid protects against catastrophic health costs but does not ease employees’ day-to-day financial or cognitive load. The widening gap between the premiums and what the medical aid covers is another source of stress.
2. Retirement funding: Offered widely in the formal employment sector, but only 42% of members are confident they are saving enough for retirement, with about 6% of South Africans on track to retire comfortably. About 50% of retirement fund members cash in their retirement funds at some point. Also, retirement funding is about long-term plans and does not address day-to-day financial stress.
3. EAPs: About half of South Africa’s corporates offer an EAP, but reach is limited, with utilisation of between 17% and 24%, in other words, as many as four in five employees with access to EAPs don’t use them.
4. Flexible work: More companies (about 60%) are revisiting their remote work policies and 82% of employers are offering flexible start and finish times. But the kind of flexibility that lets employees manage their workloads and recovery is rarely seen.
5. Wellness and learning add-ons: Many companies are offering wellness and learning opportunities, but there is often a large disconnect between what is offered and what employees need.

For the human resources departments, the goal is to design packages that drive retention, engagement and performance while not breaking the budget. They need to be able to offer benefits that solve real problems.

“When people are cashing in their pensions to pay monthly bills, it is clear something isn’t working,” says Cook.

What employee benefits are getting wrong

• They ignore the real pain points like financial stress, the high cost of healthcare and the need for more flexibility.
• They are not tested to assess how well they address retention, productivity and absenteeism.
• They are too complicated, making them hard to navigate and the actual benefits difficult to reach.
• They do not include a way to measure their efficacy and how they can evolve with the needs of employees.

To ensure they do not continue to make these mistakes, companies need to assess all their benefits to make sure they are offering benefits that actually deliver on their promises and address the almost debilitating financial stress employees face; they need to decide what should stay and what needs to be reworked.

Worth keeping:

• Medical aid, but be aware of the rising costs and have transparent conversations with employees.
• Retirement funding, with guidance, especially when it comes to the two-pot system and the consequences of cashing in part of your pension early.
• EAPs, but work must be done to improve utilisation, with buy-in from the top.

Need an upgrade:

• Financial wellness, which has been found to have the best return on investment. Financial literacy is understood to be a structural gap rather than a personal failing and is especially effective when addressed at employer level.
• Proactive mental health support.
• Meaningful flexibility that changes how work works and is not centred on where people work.

“Financial wellness doesn’t replace medical aid, retirement funding or EAPs, but it does make them more effective. Replacements cost between 50% and 200% of annual salary, but Employee Value Proposition-aligned companies can reduce turnover by up to 69%. The maths isn’t hard; reducing employees’ financial stress is a retention strategy with a measurable return,” says Cook.

For further information please visit https://wealthbit.co/

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Author: Wealth bit from Angelfish Pr and Events on behalf of Wealthbit.

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Beeld: This is a South African Afrikaans-language newspaper that provides news and analysis on a range of topics.