Product in focus: Voluntary benefits

Voluntary benefits systems can give employers an idea of employee spend on perks, which is telling of their perceived value, says Kate Donovan

Voluntary benefits schemes enable employers to give their employees the opportunity to buy an optional range of products and services, usually at a discounted price. The organisation pays to put the infrastructure of the scheme in place but employees then buy the products and services from third party suppliers out of their net pay.

Although voluntary benefits schemes can be set up and administered within an organisation’s human resources department or benefits team, plans are more commonly administered using systems from a specialist voluntary benefits scheme provider.

Richard Beddall, manager of business development at Vectis, says: “The scheme is hosted by the voluntary benefits provider and they manage the supplier relationships, negotiating preferential deals for the employees.”

Although schemes can be paper-based, many employers now run their voluntary benefits plan online. Glenn Elliott, managing director of Asperity, says that all of its clients use online systems. About 40% also ask for a scheme brochure with a telephone ordering facility, but this figure is dropping. Paper-based schemes are predominantly used by employers that have a high number of staff who are not office based.

One of the benefits of using an online system is that it can be constantly updated and refreshed, while paper-based options can become quickly out-dated.

Employers can also choose the extent to which they wish to place their voluntary benefits schemes online. While some will opt for a basic website that tells employees how to take up a discount or provides links to product suppliers, others will go for a more sophisticated model that enables staff to purchase discounted products online. Going one step further, staff can also receive cashback on online purchases. “Cashback collects in an employee’s personal account and can then be withdrawn as a cheque. The combination of discounts plus cashback gives the largest employee saving,” explains Elliott.

Voluntary benefit systems can also be used to produce regular reports to give employers feedback on the success of a scheme’s launch and to monitor trends in employee spend so that they can see the value of the scheme for their workforce. But management information capabilities will vary between systems. Some, for example, have been criticised for not telling employers how much employees have spent through the scheme.

Depending on the system used, employers may be able to make changes to their benefits offering. “From an offer management perspective, the best products allow clients to log-in and remove offers that they don’t like, without even having to speak to the provider,” says Elliott.

Employers can also integrate an online voluntary benefits scheme with existing systems, such as an organisation’s intranet site using links and banner adverts.

Dorian Hannington, head of client implementation of You At Work adds that the development of technology around voluntary benefits is now enabling employers with some systems to target the communication of particular options contained in their schemes to specific groups of their workforce.

Product file: Voluntary benefits

What are voluntary benefits systems?
Third-party providers paid for by employers typically administer voluntary benefits schemes, manage supplier relationships and negotiate preferential deals for employees using online administration systems. These can be used to produce management information reports to enable employers to track the success of their scheme, for example, around staff spend.

Who are the main providers?

  • ACE European Group
  • Asperity
  • Grass Roots
  • †Marsh
  • †Motivano
  • †Personal Group of Companies
  • Thomsons Online Benefits
  • Vectis
  • You at Work