The facts
What is flexible benefits technology?
This is a form of technology that enables employers to deliver their flexible benefits scheme to employees. Systems can operate in-house or through cloud-based servers and, as well as providing access to benefits and reward, many include interactive tools to increase employee engagement.
What are the origins of flexible benefits technology?
The first systems were introduced more than 25 years ago but, because technology was much less sophisticated then, these were very basic.
Where can employers get more information and advice?
There is no industry body to represent technology providers so employers should speak to providers, benefits consultants and other organisations to gain an insight into what would be appropriate for their needs.
More information is also available via the Employee Benefits website at: www.employeebenefits.co.uk/benefits-technology/
What are the costs involved?
Costs depend on the number of employees and the level of sophistication required. However, organisations can expect to pay from £4 per employee for flex technology only, with this rising to between £20 and £40 per employee if administration management is included. Implementation costs should also be considered. Although many providers are prepared to offer volume-based discounts, these costs can run into hundreds of thousands of pounds.
What are the legal implications?
Systems must comply with data protection regulations.
What are the tax issues?
HM Revenue and Customs' rules around salary sacrifice arrangements apply to any flexible benefits offered. From April 2017, the government will significantly limit the range of benefits that attract tax and employer national insurance (NI) advantages when offered through a salary sacrifice arrangement.
What is the annual spend?
No central data is collected so it is impossible to say.
Which providers have the biggest market share?
Leading providers include Aon Employee Benefits, Benefex, BHSF, Capita, Co-operative Flexible Benefits, Edenred, JLT, Mazars Employee Benefits, Mercer, Personal Group, Staffcare, Vebnet and Willis Towers Watson.
Which have increased their market share the most?
Without a central organisation to provide market data, it is impossible to say but Mercer's acquisition of Thomsons Online Benefits will have boosted its market share.
As the workforce becomes increasingly diverse, providing a broad range of benefits is essential. This can present challenges in terms of administration, communication and cost, which is where flexible benefits technology can help.
This provides a platform on which to deliver a flexible benefits scheme. As well as enabling employees to find out more about the perks available, and select and manage the ones they want, the employer also benefits from slicker administration processes behind the scenes.
Technological advances
Just like other forms of technology, flexible benefits technology is a market that is constantly evolving. This can be seen in the way these systems are provided, with many now cloud-based in keeping with the software-as-a-service model, rather than being stored on employers' servers.
Another key trend is a drive to make these systems as user-friendly as possible. This is being reflected in two different ways.
First, providers are developing platforms that suit employees' desire to access their benefits from a wide range of devices, at home and on the go, as well as in the workplace. Subsequently, mobile-responsive websites and apps are fast becoming the norm.
Platforms are also becoming increasingly intuitive and interactive. Rather than wrap around a series of microsites from different benefit providers, more and more systems are using single sign-on technology to offer employees a much more seamless experience.
Bigger benefits
The breadth of benefits is expanding too. While pensions and auto-enrolment have been a driver in the take-up of flexible benefits technology over the last few years, many platforms also offer access to discounted shopping websites.
While exclusive offers can help employees stretch their cash, education is also becoming a key part of the experience. Flexible benefits platforms include guides and features such as total reward statements (TRS) to help employees better understand and engage with their benefits package.
Several providers are now taking this a step further and using a range of personalised and interactive tools to enable employees to make the most of their money.
For example, as well as bringing an employee's benefits together in one place, Mercer's digital platform Harmonise includes a range of interactive tools and nudges to help them improve their health and finances. These include a price comparison site to encourage employees to save money by switching utility providers and a health module where, by connecting a fitness tracker, they can compare their health data to medically-accepted norms and receive nudges to make improvements.
Aon's platform, Bigblue, also encourages more interaction. It allows employees to add their personal finances to the platform, including credit cards, mortgages and property, to gain a deeper understanding of their financial position.
Developers are also taking employers' requirements into account. As well as helping to drive up employee engagement with their benefits package, providers are also helping multi-national organisations to offer one common platform to all employees, with each country's service tailored to the local requirements.
Future developments
While platforms are becoming more intuitive, many expect to see them develop even further over the next few years. One of the key developments will be even greater improvements in user experience, making flexible benefits technology mirror consumer sites such as Amazon.
As well as simpler user interfaces and greater flexibility, this will also encompass a much higher level of personalisation. By understanding more about the employee, which is becoming simpler as they are encouraged to add more external financial and health data to these platforms, it will be easier to tailor information towards them. This will ensure staff receive details of appropriate products which, by leading to higher levels of engagement, will also benefit the employer.
With employees expecting to be able to access their flexible benefits platforms via their phones, many also expect to see providers adopt more mobile technology. This could include using fingerprints and other biometrics in place of passwords, as well as the emergence of smart personal assistants akin to Apple's Siri and Amazon's Alexa to help employees get more from their benefits.
Making platforms more engaging could also change the shape of flexible benefits plans. With a broader range of benefits on offer, it makes sense to break away from the set annual enrolment window and move towards a more flexible model where employees can take up benefits as and when they need them.
Market matters
Given the range of developments that are likely to emerge in the flexible benefits technology space, scale is essential. While providers have grown on the back of increased take-up of platforms, consolidation is also a natural consequence.
For example, in December 2016, after working closely with Thomsons Online Benefits for several years, Mercer announced it had agreed to acquire the organisation, giving it access to Thomson's Darwin technology.
Further consolidation, whether through acquisition or strategic partnerships, is likely to shape the market further in the coming years.
Statistics
- 65% of employees expect their employer to provide guidance on the employee benefits available to them (Source: Capita Employee Benefits, October 2016)
- 68% of employee respondents want to access all of their benefits from a single place (Source: Thomsons Online Benefits, March 2017)
- 54% of employee respondents want to access their benefits from a mobile device (Source: Thomsons Online Benefits, March 2017)
- 27% of employer respondents provide employees with single sign-on access to their benefits (Source: Thomsons Online Benefits, March 2017)
- 85% of employer respondents offer an online flexible benefits platform to increase employee engagement (Source: Aon Employee Benefits, February 2017)
