On-going developments are shaping the future for flexible benefits schemes, says Kate Donovan
Even regulars at fine dining establishments where there is a menu of delectable choice can lose interest in what is on offer. Similarly, a wide selection of perks is not always sufficient to maintain the attraction of a flexible benefits scheme. Innovations in the flex market, however, will help to ensure that even well-established schemes continue to hold their appeal for staff.
Jacqueline Otten, principal at Towers Perrin, believes there is now increased flexibility around core benefits, with some staff being given the chance to opt out of some core perks such as private medical insurance.
The move to incorporate pensions within flex plans, is, she says, helping to make the benefit more attractive to younger staff. It also means that staff can opt to use an employer contribution for the pension in different ways, for example, they might wish to request that half of the money goes towards paying off their student loan for the first five years.
“It’s not a trend that will take off tomorrow but a number of people are thinking about it. Paying off their big debts is a better use of money than trying to build up a pension when they are in their early 20s,” says Otten.
Technological advances are also occurring. Philip Hutchinson, principal at Mercer Human Resource Consulting, envisages the development of an online portal that integrates total reward with flexible benefits. Employees will be able to access the portal to view their total reward statements before using links incorporated into the system to take them to through other benefits areas.
Hutchinson believes such integrated systems will reduce the risk of data corruption. He also predicts the development of a reward system where managers award staff points which can be translated into cash and put into their flex pot directly via an IT platform, rather than through a printed report. This would reduce employers’ administration, while giving staff increased flexibility.
Some employers have also begun to repackage how they offer certain perks in a bid to keep flex fresh. New options include lump sum accounts into which staff can save a monthly amount to pay for example learning or wellbeing accounts.
Furthermore, restricting enrolment to schemes to once a year could become a thing of the past. Hutchinson sees flex schemes being split between benefits that have to be chosen once a year and those that are available on demand.
How flex schemes are communicated is also evolving with employers tailoring benefits booklets or email messaging to suit different employee segments according to their previous benefits take up and lifestage.
Ian McKenna, director of the Financial Technology Research Centre, adds that innovation can also be seen around benefits delivery systems. Smart phones, for example, which are mobile phones with functionality similar to a personal computer, are becoming increasingly common and could allow more staff to deal with work-related affairs while out of the office. McKenna adds face-to-face communications are no longer always economical or desirable for employers.
Royal Bank of Scotland tailors communications
The Royal Bank of Scotland uses data analysis of employees’ take-up of benefits to segment its workforce in order to target communications to specific groups of staff.
Although take-up initially improved year-on-year after the scheme’s launch in 1998, the firm’s expansion through acquisition and organic growth resulted in changes to its employee profile. Jim Cowan, senior consultant remuneration and benefits, says: “We had introduced this programme that was all about recognising the individuality of people but, on the other hand, we were kind of taking a bit of a one-size-fits communication approach.” Using year-on-year in-house analysis of take-up rates from a monthly data-feed, the bank observed clusters of benefits that were common to segments of employees, which has enabled it to tailor its benefits communication to suit each group.