HR and finance teams are signing off 2027 benefits budgets just as employees absorb a repo rate hike, petrol above R30 a litre and medical aid increases of around 8% from January. The question for employers is whether the benefits they renew will make any of that easier.
As the year comes to a close, HR and finance teams are preparing to sign off on their benefits budgets for 2027. Most medical aids are mulling premium increases of between 7.4% and 8.9%, while the Council for Medical Schemes (CMS) has suggested an increase of just 3.8%. The increases, irrespective of their size, will begin on January 1.
Adding to the pressure on the medical scheme industry is Health Minister Dr Aaron Motsoaledi’s recent decision to allow pharmaceutical companies to increase prices for a second time this year, forcing the industry to look for ways to manage the additional R1bn in medicine expenditure next year, according to Business Day.
No matter how the industry deals with this, medical aid members will be feeling it in their first pay cheques of 2027.
And this is not even a full list of their financial obligations.
The petrol price breached R30 per litre for the first time in October, after a hike of R3.33 per litre pushed it to an unprecedented R30.25 per litre. Fuel prices have been on an upward trajectory since the start of the Iran war in February this year, which has resulted in the closure of the Strait of Hormuz, through which about 20% (about 20-million barrels per day) of the world’s petroleum and liquid fuels pass. The resulting mayhem in the oil market has sent the oil price above $100 per barrel. South Africa’s Central Energy Fund data indicates motorists can expect another increase in November. The fuel price hikes are likely to put pressure on the South African Reserve Bank to increase rates to keep inflation in check.
And, while stretched employees try to come to terms with these stressors, the January medical aid increase is likely to consume any tax relief they enjoyed after Finance Minister Enoch Godongwana’s bracket adjustments in the February 2026 budget.
Putting the finishing touches to this is the laundry list of end-of-year expenses, from Christmas gifts, travel and holiday accommodation to textbooks, uniforms and stationery, that can lay waste to carefully balanced household budgets.
It can be tempting for the HR executives who negotiate the annual benefit renewals to stick with the same programme as it appears to be ticking all the boxes, but companies that do the same things in the face of intensifying financial pressure will have to deal with the consequences, including the cost of replacing employees at 50%-200% of their annual salary, along with other non-financial costs.
“There is a high cost to losing someone. When someone feels financially trapped, another employer’s offer can look like an escape route. Even if they enjoy their work, they may not be able to afford to stay. When an experienced person leaves, you lose more than just a salary. You have recruitment costs, management time spent interviewing and a new person who needs time to become effective. You may also lose relationships, knowledge and momentum,” says Alex Cook, Chief Executive Officer of fintech company Wealthbit.
Cook says employers cannot afford to ignore this, nor the data from Wealthbit’s Financial Stress report, including:
- 70% of employees are considering changing their jobs due to financial pressure.
- More than 80% of employees say money stress has a direct effect on their energy, focus and motivation.
- 58% of employees say money worries distract them at work.
To ensure that benefits are actually benefiting employees, HR and finance teams need to test each line and ask the following questions before signing off on them:
- Is anyone using it?
- Does it ease the pressure employees carry every day?
- Does it help our organisation retain people?
“Addressing financial stress can alleviate many of the other stressors employees face and result in better engagement. It is also the underlying driver for many other challenges, such as health and mental health issues that often lead to absenteeism, presenteeism and even higher turnover,” says Cook.
For further information, please visit HR and finance teams are signing off 2027 benefits budgets just as employees absorb a repo rate hike, petrol above R30 a litre and medical aid increases of around 8% from January. The question for employers is whether the benefits they renew will make any of that easier.
As the year comes to a close, HR and finance teams are preparing to sign off on their benefits budgets for 2027. Most medical aids are mulling premium increases of between 7.4% and 8.9%, while the Council for Medical Schemes (CMS) has suggested an increase of just 3.8%. The increases, irrespective of their size, will begin on January 1.
Adding to the pressure on the medical scheme industry is Health Minister Dr Aaron Motsoaledi’s recent decision to allow pharmaceutical companies to increase prices for a second time this year, forcing the industry to look for ways to manage the additional R1bn in medicine expenditure next year, according to Business Day.
No matter how the industry deals with this, medical aid members will be feeling it in their first pay cheques of 2027.
And this is not even a full list of their financial obligations.
The petrol price breached R30 per litre for the first time in October, after a hike of R3.33 per litre pushed it to an unprecedented R30.25 per litre. Fuel prices have been on an upward trajectory since the start of the Iran war in February this year, which has resulted in the closure of the Strait of Hormuz, through which about 20% (about 20-million barrels per day) of the world’s petroleum and liquid fuels pass. The resulting mayhem in the oil market has sent the oil price above $100 per barrel. South Africa’s Central Energy Fund data indicates motorists can expect another increase in November. The fuel price hikes are likely to put pressure on the South African Reserve Bank to increase rates to keep inflation in check.
And, while stretched employees try to come to terms with these stressors, the January medical aid increase is likely to consume any tax relief they enjoyed after Finance Minister Enoch Godongwana’s bracket adjustments in the February 2026 budget.
Putting the finishing touches to this is the laundry list of end-of-year expenses, from Christmas gifts, travel and holiday accommodation to textbooks, uniforms and stationery, that can lay waste to carefully balanced household budgets.
It can be tempting for the HR executives who negotiate the annual benefit renewals to stick with the same programme as it appears to be ticking all the boxes, but companies that do the same things in the face of intensifying financial pressure will have to deal with the consequences, including the cost of replacing employees at 50%-200% of their annual salary, along with other non-financial costs.
“There is a high cost to losing someone. When someone feels financially trapped, another employer’s offer can look like an escape route. Even if they enjoy their work, they may not be able to afford to stay. When an experienced person leaves, you lose more than just a salary. You have recruitment costs, management time spent interviewing and a new person who needs time to become effective. You may also lose relationships, knowledge and momentum,” says Alex Cook, Chief Executive Officer of fintech company Wealthbit.
Cook says employers cannot afford to ignore this, nor the data from Wealthbit’s Financial Stress report, including:
- 70% of employees are considering changing their jobs due to financial pressure.
- More than 80% of employees say money stress has a direct effect on their energy, focus and motivation.
- 58% of employees say money worries distract them at work.
To ensure that benefits are actually benefiting employees, HR and finance teams need to test each line and ask the following questions before signing off on them:
- Is anyone using it?
- Does it ease the pressure employees carry every day?
- Does it help our organisation retain people?
“Addressing financial stress can alleviate many of the other stressors employees face and result in better engagement. It is also the underlying driver for many other challenges, such as health and mental health issues that often lead to absenteeism, presenteeism and even higher turnover,” says Cook.
For further information, please visit https://wealthbit.co/financial-freedom-programme
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Author: Neke Ndlovu from Angelfish PR and Events on behalf of Wealthbit.
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Financial Stress Is a Retention Problem, but Most Employers Are Still Treating It Like General Wellness