These standards encompass the 10 key benefits present in most plans: pension, holiday, life insurance, income protection, medical insurance and health screening, childcare vouchers, bikes-for-work, dental, travel and retail cards, plus a compliant salary sacrifice structure, with employer control over funding core benefits and harmonisation of variable terms of employment.
About half of UK employers with more than 500 employees provide flexible benefits plans. Tax and national insurance efficiency is delivered through salary sacrifice arrangements for employees and employers alike.
A range of additional benefits are offered through flex, but these are not present in most plans. These include cars, car parking, computers, mobile phones, charitable giving, gym membership, dining cards, and further risk benefits such as critical illness and personal accident cover.
One could easily assume that flex has reached a point where it might not evolve any further. We do not believe this is the case, and think flex is continuing to develop in response to these factors: legislative change, corporate social responsibility, employee diversity and demographics, corporate change and cost management concerns, provider developments, new benefits, risk benefit cost changes and technology developments.
Plan changes
The main changes we are seeing being made to flex plans include a change in the core benefits offered. Due to increased costs and risk management, the design and funding of core benefits are also changing, including claims on income protection covered for restricted terms, the use of excesses and restrictions on medical policies for certain conditions.
New benefits emerging include car rental, learning accounts, gadget insurance, domestic insurance and optical insurance.
The expansion of flex as a channel to market employers’ own products is a further trend. Of course, not all employers sell consumer products or services, but those that do are beginning to see greater potential in their own employees as both customers and advocates.
Technology
There are myriad technology developments across the flex market, including more decision-making tools such as net pay, retirement and savings modellers, as well as analytical tools.
More internet shopping features are also appearing on flex sites, which are becoming employee portals to access not just benefits but information, tools and transactional forms for all reward.
And employees are increasingly able to access their flexible benefits via smartphones and pads to make transactions.
Communication
Gone are the days of the hard-copy booklet as the only method of flex communication. New forms of communication include embedded video, vox pops and ‘did you know?’ pop-ups on flex platforms.
Employers should be aware that personalisation is more significant than segmentation, and the inclusion of gamification tools that allow employees to interact with communications as part of learning or understanding employer messages, as well as social media, are key methods to help optimise benefits take-up.
Flex is here to stay and it continues to develop.
Martha How is reward principal at Aon Hewitt
Read the full version of our Flexible Benefits supplement.