Employer-paid benefit choice most common in UK

Almost half (48%) of respondents in the UK offer some form of choice in employer-paid benefits, according to research by benefits consultants Mercer.

The European survey on employee choice in benefits, which polled 516 employers across 11 European countries, found that employer-paid benefit choice is the most common among respondents in the UK, followed by Sweden (44%), the Nordic countries (39%), Denmark (38%), the Netherlands (37%), Spain (35%) and Germany (28%).

The research found that employer-paid benefit choice is less common in France (13%), where legal and tax issues pose significant challenges, and in Italy (5%), where employee choice is in its infancy.

The research also found:

  • Of all respondents who do not currently provide choice, 69% said they are looking to introduce some form of choice in the future, whether in the form of voluntary benefits, choice beyond voluntary benefits, or a fully comprehensive flexible benefits programme.
  • Complexity of administration (39%) and cost (39%) were the most cited challenges for implementing an employee-choice programme.
  • 36% of respondents with a comprehensive flexible benefits programme now outsource all aspects of administration, which is a substantial increase from the 2009 survey (22%).
  • 58% of respondents cited remaining competitive in the marketplace as the most important reason for implementing employee-choice programmes, while 54% cited retaining current employees and improving employee engagement.
  • 20% of respondents said their organisation is not ready for a global employee-choice strategy, down from 35% in the 2009 survey.
  • 75% of respondents described the employee response to choice schemes as being largely positive, and 62% agreed that their employee choice programme has met their original objectives (62%).

Kim Honess, UK head of flexible benefits at Mercer, said: “As the flexible benefits market has grown, one of the major attractions has been the ability of employee-choice programmes to generate savings for the organisation while controlling the annual spend on benefits.

“There are a range of flexible benefits which attract no tax or national income contribution liabilities.

“Harmonising and standardising flexible benefits internationally can be a challenge when dealing with differences in customs, tax laws and other legislative factors.

“However, once established, a global strategy can aid employee engagement and benefits alignment, and, in an era where the global workforce is so fluid, an international flexible benefits scheme can bolster multinationals in the global war for talent.”

Read more articles on flexible benefits schemes

Mercer will run workshops based on this research at the Employee Benefits Summit 2012