Exclusive Mercer research: Technology plays key role in salary sacrifice

More than a third (37%) of organisations are planning to introduce technology platforms to automate their salary sacrifice arrangements in the next 12 months.

According to Mercer’s Salary sacrifice and technology – evolution research, many organisations will also streamline existing arrangements, while providing greater benefit choice and improved communication through online access.

Of the organisations polled, 46% currently offer salary sacrifice arrangements, while 43% are looking to introduce it in the next 12 months.

Stephen Hempenstall, a principal and consultant at Mercer, said: “Many companies have adopted salary sacrifice for their pension arrangements in the last couple of years, appreciating the significant savings in employer national insurance that can be had.

“What we are seeing now is a growing interest in developing technology to automate this process, communicate existing benefits in a more cost-effective and engaging way, apply it to wider benefits, such as holidays and voucher schemes, and offer greater benefit choice. In some cases, the aim is to create total reward statements and eventually to introduce benefit choice through a fully flexible benefits scheme.

“Online benefit platforms can be introduced at a much lower cost than in the past and are now affordable to many medium-sized companies with, say, 200 employees or more. Savings made from salary sacrifice arrangements will often pay for the new benefit technology within the first year and possibly within only a few months.

“Pressure to secure greater employee engagement has generally been a catalyst in the search for benefit enhancements where HR budgets for this are minimal or non-existent. Offering employees greater choice can be a great motivator as benefits are targeted at individual employee needs.”

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