Employee Benefits/Towers Watson Flexible Benefits Research 2012: Structure

More employers are extending flex to staff based overseas, and younger employees are more likely to want to trade their benefits down for cash, says Tynan Barton

The structure of flexible benefits schemes has remained largely unchanged over the years. Back in 2009, the most common way that schemes were structured was by enabling staff to take tax-efficient benefits through salary sacrifice.

This again tops the list this year. However, in 2010 and 2011, the main way schemes were structured was for employees to be able to trade up or down from their current benefits package, which is cited by 26% of employers this year. This suggests employers believe flex is most effective in offering benefits that bring tax breaks for staff, making their money go a little further.

Unlike some benefits, flex is not the preserve of senior employees. Almost half (49%) of this year’s respondents offer all employees access to the same scheme. One-fifth (20%) offer flex to the whole workforce, but structure it differently for different employee groups. A further 14% restrict it to permanent employees, while 8% offer it only to salaried staff.

More employers are also looking to offer flex to staff based outside the UK. This year, 16% said they offer a plan in other regions, compared with 11% in 2011. Of these, all offer plans in Europe (outside of the UK), 73% offer flex in Asia Pacific, 63% in Australasia, 73% in the US and Canada. Only 33% offer flex in Africa, but 67% are considering doing so for this region.

This shift towards international flexible benefits plans may be due to the increasing globalisation of business, with organisations looking to replicate or offer similar benefits in different locations.

Employee Benefits

Although employers allow staff to flex down cover on many of the benefits offered through flexible benefits schemes, many ensure that employees must take a minimum level of cover on some, primarily group risk, perks, which is unsurprising given the support and security these benefits offer staff.

Just over half (51%) of respondents specify that staff must take a minimum level of cover on life assurance, and 28% on group income protection. However, 23% of employers do allow staff to flex down cover on life assurance and take cash instead. Just over half (52%) allow staff to flex down cover on holiday, while 30% do not offer employees the facility to flex down cover in exchange for cash.

Younger employees, in the 16-to-34 age group, are more likely to trade down benefits or use their flex pot to increase salary. This reflects the differing priorities at employees’ different life stages. The younger age group will typically earn less and have higher levels of debt, while older staff may perhaps have more complex financial matters.

Employee Benefits
Employee Benefits
Employee Benefits

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