Employee Benefits/Towers Watson Flexible Benefits Research 2012: Attitudes

Many employers expect to focus on tax-efficient benefits and better promotion of flex in the year ahead as the economy continues to struggle, says Tynan Barton

Most respondents believe a flexible benefits scheme adds value to a business by enabling staff to choose perks that best suit their lifestyles and needs. Many employers also see that flex recognises the diverse needs of a workforce and can promote understanding and appreciation of benefits.

For the past three years, these have been cited as the main advantages of running a flex plan. In 2008, recognition of the needs and values of employees held a clear lead (81%) over issues such as making the most of tax breaks (41%), a factor that was cited by 61% of respondents this year.

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But despite the value flex can add by meeting employees’ needs, cost has always been seen as a barrier to introducing a scheme. This year, implementation, platform and administration costs are ranked as the top three obstacles to implementing a flex scheme.

The proportion of employers that cite the cost of flexible benefits platforms as a barrier has increased over recent years, suggesting a lack of, or a tighter control of, the budget for flex. Employers spend the biggest proportion of their flex budget on technology and administration.

Getting approval for the business case for implementing flex remains a problem for employers, always ranking near the top of the list. Some 45% of respondents cited this as a main barrier this year, which is similar to the 48% that said it was a issue in 2011 and 47% in 2010.

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As in previous years, around two-thirds of respondents (66%) believe flexible benefits scheme are most effective in making the most of benefits that carry tax or national insurance (NI) breaks.

This reason was cited by 64% of respondents in both 2011 and 2010. In 2009, however, the top achievement of flex, as cited by 60% of employers, was the fact that it promoted employee understanding and appreciation of benefits. This factor appears in fourth place this year, cited by 53%.

Holding an annual flex review meeting is essential in order to find out if a scheme is meeting employee expectations as well as the employer’s objectives. According to respondents, the main lessons they learnt from their last such meeting was that communications were not targeted enough and that employee take-up was not as high as expected.

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Employers appear undecided about what the future holds for flex. While 34% of respondents believe schemes will broadly remain as they are, 13% think flex will become integrated into corporate wrap products. These statistics are similar to last year’s, suggesting perhaps that the corporate wrap market has some more evolving to do to have a greater effect on this marketplace.

Many employers (37%) believe flex schemes will become integrated into wider total reward platforms, a trend that has been prominent in recent years. This differs little from 2011, when 38% thought this was a viable possibility.

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The world of communication has undergone great development in recent years, with social and mobile media growing in prominence. But when it comes to communicating flexible benefits schemes to employees, the more established methods remain popular.

Newer forms of media are also being used in some organisations, with 5% of respondents using social media, such as Twitter and Facebook, to communicate flex and 16% using podcasts, online videos or webcasts. It will be interesting to see how this trend develops over the next few years.

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