If you read nothing else, read this…
• As the corporate wrap market develops, there is an increasing overlap between corporate wrap and flexible benefits providers.
• Several providers have now formed partnerships.
• Some wrap providers have evolved to develop a broader flexible benefits proposition, but there is debate over how much the two can co-exist.
Case study: Svitzer corporate wrap platform offers savings flexibility
Svitzer UK offers a corporate wrap platform to give its staff flexibility in saving for their future. The wrap, introduced by the marine services firm last year, includes a group self-invested personal pension (Sipp) and an individual savings account (Isa).
Staff can invest in a number of ways. For example, those that want to save money tax-efficiently but still have access to it can use the Isa. But they must ensure their combined employer/employee pension contribution is at least 15%.
David Noakes, company secretary and pensions manager at Svitzer UK, says: “Within our corporate wrap there is some flexibility in that people have the ability to contribute within certain parameters, either more or less to the pension, or more or less to the Isa. It gives people the chance to save for their medium- and long-term financial needs.”
Since Svitzer introduced the wrap, provided by Hargreaves Lansdown, pensions take-up has risen from under 65% to more than 75%.
Providers of corporate wrap platforms are exploring the advantages of integrating them with flexible benefits systems, says Nicola Sullivan
The use of corporate wrap platforms (also known as employee wealth, workplace savings or corporate platforms) in conjunction with flexible benefits schemes or technology could influence the way employers offer benefits.
In recent years, legislative changes such as the incoming pension reforms have driven demand for the most efficient technology and administration processes. Providers are responding by flaunting the capabilities of corporate wrap and flexible benefits platforms.
The Platforum’sCorporate platform guide, published in June, found 27% of respondents would consider introducing a corporate wrap platform as a bolt-on to existing benefits and technology, and 24% would do so as part of a review of technology, such as that required for pensions auto-enrolment.
After the launch of corporate wraps onto the market, many providers are now working to link their systems to flexible benefits platforms. Recent data, also from The Platforum, showed three of the corporate wrap providers currently operating in the market are using flexible benefits technologies within their products (see box, page 28).
In May, for example, provider Hargreaves Lansdown licensed Staffcare’s software for its corporate wrap product, which will also include total reward statements, flexible benefits and auto-enrolment administration.
Tom McPhail, head of pensions research at Hargreaves Lansdown, says wraps are one mechanism that has enabled employers to offer financial products in the workplace besides pensions in the most tax-advantageous way for staff. The next step is enable employers to offer a broader range of perks on the same platform or incorporate corporate wraps into a flexible benefits offering.
“Having started out life as a corporate wrap provider, we have evolved to offering a broader flex proposition,” says McPhail. “Essentially, what we are doing is going to employers and saying ‘here is an integrated proposition; you can deliver as little or as much of it as you want’. If an employer just wants a group Sipp [self-invested personal pension], we will just turn the group Sipp light on and that’s all it will see.”
One sign-in for two platforms
Flexible benefits arrangements incorporating corporate wraps will typically enable staff to sign in just once to view the benefits available on both platforms. Graham Jarvis, managing director at Staffcare, says: “There is no need to replicate the functionality that is already on, say the pension provider’s system, which can be linked seamlessly. From the employee’s perspective, it is seamless.”
Last year, Standard Life launched its corporate wrap Lifelens, which incorporates flex options and technology provided by Vebnet, which the pensions provider acquired in 2008.
Jamie Jenkins, head of workplace strategy at Standard Life, says traditionally, flexible benefits were integrated with payroll and HR systems, with most activity taking place around an annual election window. “Employees did not necessarily go in and run [savings] projections and chase funds; it was more about how much was paid into which products, pensions or life assurance,” he says.
Flex platforms have now evolved to include more interactivity and dynamic features, such as online payslips and total reward statements. The ways in which flex handles pensions has also become more dynamic, says Jenkins.
This is because flex systems can provide pensions administration, management information and straight-through processing for members, who can also make changes to investments and monitor contribution levels through the technology. These capabilities can be used to complement the financial benefits available via corporate wrap platforms.
Not all corporate wrap platforms currently on the market incorporate flex technologies. But Wayne Lewis, head of corporate platform at Friends Life, says that although corporate wraps and flexible benefits play different roles, they can co-exist. “Generally, a flex platform offers a point-in-time choice,” he says. “There is a flex [enrolment] window and employees might have a limit on what they can spend on the flexible benefits platform, or it might operate salary sacrifice [arrangements]. They choose what benefits they want, then that window closes down.”
Conversely, a corporate wrap platform is about engaging staff in workplace savings benefits, such as pensions and corporate individual saving accounts, says Lewis. “It is about giving employees access to the right information so they can make the right choices. This is an ongoing process. Employees are looking at the performance of the funds they have chosen, and finding out what their pension is going to give them at retirement.”
Lewis sees employers’ flex platforms linking to corporate platforms, allowing staff to view all their benefits with a single sign-on.
But not all providers think corporate wrap platforms and flex should cross over. Last year, Alexander Forbes teamed up with Staffcare to incorporate its benefits communication and administration software into Alexander Forbes’ benefits technology, which it describes as an employee benefits platform.
Steve Watson, head of defined contribution at Alexander Forbes, says: “I don’t think anyone really knows what a corporate wrap is, whereas with a benefits platform, it is really clear. It does what it says on the tin.”
With the corporate platform market still largely in development, the extent of its integration with flex systems, and the impact of this, is yet to become fully clear.
Latest research on corporate wraps and flex
• More than a quarter (27%) of respondents to The Platforum’s Corporate platform guide, published in June, would introduce a corporate wrap as a bolt-on to existing benefits and technology, and 24% would do so alongside a review of technology, such as that required for auto-enrolment.
• Employee Benefits/Towers Watson Flexible benefits research 2012, published in April, shows employers appear undecided about what the future holds for flex. While 34% of respondents believe schemes will remain broadly as they are, 13% think flex will become integrated into corporate wrap products.
• The same research also found that just over one-third of employers (37%) believe that flexible benefits schemes will become integrated into wider total reward platforms.
