As the complexity of flexible benefits schemes increases, a growing number of employers are fully or partly outsourcing plan administration, says Tynan Barton
Implementing a flex scheme can be a huge administrative task, so responsibilities are often split between in-house and outsourced resources.
This year, it is an almost even divide, but the number of employers taking on the full task themselves continues to decline. Back in 2008, 44% of employers handled their scheme in-house and 18% fully outsourced, and in 2006, 58% handled their scheme internally.
A large majority of respondents (87%) have service level agreements in place with all or some providers, ensuring a common understanding of how benefits should be provided.
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The way in which employers use consultants has changed over the years. In 2008, consultants were used mainly for scheme design, provider selection and administration. But it is now increasingly popular to use a consultant for communication, as cited by 50% of respondents that use a consultancy firm this year, compared with 36% in 2008. This highlights the importance of boosting staff awareness.
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The proportion of employers that claim not to know how much their flexible benefits scheme costs to run each year has fluctuated somewhat over the years. In 2009, 40% said they did not know, while last year, 31% said this was the case. This is perhaps surprising given many organisations’ continuing focus on costs.
Where employers do know how much their scheme costs to run, the most common figure has remained at £10 or less per employee per year over the past three years. Technology and administration remain the most costly aspects of running a flexible benefits scheme, as has been the case since 2009.
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More than three-quarters (79%) of respondents measure the success of their flex scheme. Employee take-up rates continue to rank as the top factor in judging a scheme’s success, having replaced employee satisfaction, which was cited as the top reason in 2009 and 2010.
Among the 21% of employers that do not measure the success of their scheme, lack of time (38%) and lack of resources (33%) are the most common reasons given for this decision. A further 33% of this group intend to begin measuring flex success in the next 12 months.
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