US, UK Employers Shift Benefits Strategies Amid Rising Costs

U.S. employers are increasingly challenged by rising benefit costs, which have become the top concern for 90% of companies in 2025, up significantly from previous years. In response, 63% of employers plan to reallocate or rebalance benefit spending over the next three years, focusing on extracting more value from existing programs rather than expanding benefit portfolios. Additionally, 73% aim to switch to better-value vendors across health, retirement, and risk benefits to address budget pressures and improve outcomes. Employers are also prioritizing benefits that matter most to employees, including mental health support, financial wellbeing, and family support, while enhancing communication and personalization to improve the overall employee experience. This shift toward smarter spending and strategic use of benefits reflects companies' efforts to manage cost inflation and economic uncertainties while maintaining engagement and retention. Similar trends are observed in the UK, where rising benefit costs are also driving changes in employer strategies.