More employers are outsourcing the administration of flex, and measuring the success of their scheme is becoming a greater priority, says Nicola Sullivan
Although the proportion of respondents that manage their flex plan fully in-house has continued to fall, it is still the most popular way to administer a scheme. Six years ago, 51% of employers managed their plan in this way. By last year this figure had fallen to 39%, before dropping even further this year to 25%.
Just under a quarter (23%) of employers partly administer their scheme in-house and partly outsource it. It is also becoming more common for employers to outsource the technology aspect of their flex, with 23% doing so, compared with 13% in 2010 and 14% in 2009. This could be due to more providers and consultants offering online flexible benefits technology platforms, as well as many employers turning to the experts to handle administration while the employer looks at strategy.
Where respondents use a consultancy, the most common reason is for help with provider selection (61%). This is followed by help with scheme design and administration (both 52%), scheme communication (48%), legal aspects (35%) and tax approval (30%).
Given the economic climate, it is surprising 31% of respondents claim to have no idea how much it costs to offer flexible benefits, although this figure is lower than last year, when 41% of organisations admitted they did not know the annual costs of flex.
Where employers have recorded what their scheme costs, 16% spend £10 or less per head, compared with 14% in 2010, and 12% spend £11 to £15. The proportion of those spending £16 to £20 is also 12%, which is slightly less than last year's 13%. Meanwhile, 13% spend £21 to £25 and a similar number spend £30 or over, compared with 14% that spent this amount last year.
Most employers said the cost of flex covered technology (87%), administration (75%), a helpline and design of the scheme. Many invest heavily in technology to reduce admin and ensure the scheme is user-friendly Communication factors in highly, indicating a desire to maximise take-up.
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The number of employers that measure the success of their flex scheme has risen steadily over the years. This year, 71% did so, up from 64% in 2009 and 53% in 2005. Tighter cost margins have increased employers' interest in the return on investment from benefits. Most look at take-up rates as a measure of success, while 65% focus on employee satisfaction.
Many employers use the national insurance (NI) savings from offering tax-efficient benefits via salary sacrifice arrangements within flex to fund either the scheme itself or other initiatives. The level of NI savings is used as a measure of success by more than half (52%) of respondents. NI and tax savings for the employee are measured by 37% of respondents.
The most common way for employers to capture information on the success of their scheme is by obtaining data from their flex provider. This is followed by staff surveys.
When it comes to those that do not measure their plan's success, 41% cite a lack of resources as the reason. This has risen from 31% in 2009 and 33% in 2010.
Read more from Employee Benefits/Towers Watson Flexible Benefits Research 2011
