In the study of 1,500 financial services HR professionals, a third (33%) thought that companies would pursue alternative pay strategies with a focus on broader rewards, while a small minority predicted a decrease in total pay (7%) as the primary impact of the regulation.
Despite this, only 16% of those polled felt that rewards would be the most important human capital issue to address in their organisation over the next 12-18 months.
Twice as many said their biggest challenges would be talent management (34%) or performance management (31%).
According to the poll more than half (56%) of financial services organisations plan to offset the impact on rewards by formalising training and development programmes, while other areas of focus included pension programmes (20%), flexible working arrangement programmes (15%) and health and wellness programmes (10%).
Mark Shelton, managing director of Towers Watson's financial services Talent and Reward practice, said: "Financial services companies are aware that when the EU bonus cap comes into force many of their employees are going to receive overall lower pay and they recognise the need to make up for this shortfall in a number of different ways.
"Some will do it through higher fixed pay or increased pension contributions, but many companies are planning to invest in training and career development, healthcare and flexible working programmes in order to continue to motivate and engage employees despite the potential impact on their annual pay."
The research also found companies are braced for further pay regulation in the coming years. More than two-thirds (68%) predict politicians and regulators are likely to have the greatest impact on industry rewards over the next three years, more influential than shareholders (22%), employees (5%) and the media (4%).
In addition, when asked which financial market would benefit the most if financial services talent and key roles in the industry left the UK market, New York (42%) was viewed as the most likely beneficiary, followed by Hong Kong (26%), Singapore (16%) and Switzerland (11%).
"Pay regulation is the issue de jour for many policymakers, both at a European level and here in the UK, and financial services companies clearly anticipate that this will continue," said Shelton.
He added: "While many companies are consulting more closely than ever with shareholders and employees on this topic, it is governments that are likely to have the biggest impact."
