Benefits Research 2011: How employers offer benefits

Most employers still offer traditional core benefits to at least some of their employees. But beyond this, where employers offer benefits through another mechanism, the market has seen a significant shift in the way perks are offered, largely because of product and provider evolution.

In recent years, this has resulted in an increasing blurring of the boundaries between flexible and voluntary benefits. Although we have worked with more traditional definitions of these schemes for this survey, as new products such as corporate wrap platforms enter the market, it will be interesting to see what the future holds for flexible and voluntary benefits.

As it stands, this type of movement in the market enables employers to offer staff much greater flexibility and choice around their package. This is an extension of a trend that has been gaining momentum over the past seven years in terms of diversification in the way employers offer benefits to staff.

Back in 2004, 60% of respondents provided voluntary benefits, 69% offered access to tax-efficient perks via a salary sacrifice arrangement, and just 15% operated a flexible benefits plan. Since then, the proportion of employers offering benefits through each of these mechanisms to all staff has risen consistently, reaching a peak this year.

How employers offer benefits


The†complexity and evolution of benefits has led to myriad definitions. For the purpose of this research, we have used the following:

Core package
The traditional package of employer-paid perks, in which employees cannot opt out of, or switch between, benefits.

Flexible benefits
A package of employer-paid benefits that allows employees to switch between two or more benefits or between employee-paid perks and cash.

Voluntary benefits
Products and services on which the employer negotiates a discount with suppliers, but which the employee pays for out of his or her net salary.

Salary sacrifice
The mechanism through which employees can opt to pay for tax-efficient benefits by sacrificing some of their gross salary for the employer to buy the benefits on their behalf.

Read more articles from the Employee Benefits/Alexander Forbes Benefits Research 2011