Emergency eldercare, car salary sacrifice schemes and gadget insurance look set to be the fastest-growing benefits in flexible benefits plans, according to the Employee Benefits/Towers Watson Flexible Benefits Research 2014, which received 346 responses from readers of Employee Benefits and users of www.employeebenefits.co.uk in January 2014.
If you read nothing else, read this…
- Emergency childcare, gadget insurance and salary sacrifice car schemes look set to be the fastest-growing additions to flexible benefits schemes.
- However, a current lack of providers means it may be tricky for employers to offer these benefits, because of lack of choice and little opportunity for price comparison.
- These benefits markets look set to grow further.
Emergency eldercare is set to grow by 142%. Some 9% of survey respondents currently offer this as a benefit, with a further 10% indicating they are planning to add it to their flexible benefits schemes.
Meanwhile, car salary sacrifice schemes look set to see 122% growth and gadget insurance 100%, if all respondents that indicated they are planning to add these benefits to flex actually do so.
To put this into context, Paul Brown, head of flexible benefits consulting at Towers Watson, says: “These are generally benefits that are not widely provided right now, for example eldercare and gadget insurance, so even seeing a 100% increase in the number of [employers] offering these benefits still won’t see them being provided by more than one in four [organisations].
“It might seem surprising that these benefits are being embraced by so many organisations as I typically see very low levels of employee take-up from benefits such as salary sacrifice cars, often under 5%.”
Both emergency eldercare and gadget insurance are relatively new benefits to be included in flexible benefits plans, which could explain why these are among the fastest-growing additions to flex rather than more established benefits that are already offered by many employers.
Their popularity is also likely to be driven by employee demand as staff grapple with eldercare issues and purchase increasing numbers of gadgets such as tablets and smartphones.
“Employers have a desire to increase the range of benefits on offer and don’t mind if those benefits have limited appeal to the whole workforce,” says Brown. “Some benefits have a targeted appeal to a particular segment of the plan, which might be a good balance with other less popular benefits for that segment.
“In my view, the trick is for employers to make sure they have an appropriate range of benefits to appeal to the full diversity of their population. With flexible benefits, the good thing is that each employee will end up with their own tailored benefit package matched to their preferences.”
However, because such benefits, particularly emergency eldercare, are still relatively new to the market, employers may find these more challenging to introduce than some more established benefits. For example, the currently limited pool of emergency eldercare providers means employers have little opportunity to shop around on factors such as price.
Dipa Mistry-Kandola, a senior consultant at LCP, says: “The issue we face is that there are not very many providers in the market. Eldercare is asked for when we do focus groups with employees and staff surveys, but it’s quite a challenging benefit for employers to put in because there aren’t many providers out there for them to compare.
“Also, not many of them have a proven track record yet, so while it is something they definitely want, when they want to put it in, the providers aren’t ready.”
However, Mistry-Kandola says she expects this market to develop in much the same way as the childcare voucher market when that benefit was first introduced.
“When childcare came in, and bikes as well, they were benefits that were talked about loads and people wanted them, but because of a lack of providers in the market, they didn’t put them in and then, a year or two later, there were many providers. In 12 to 18 months, we will see more of those schemes in place but for now, employers are struggling to find a solution that fits in with them because they have to go with the two providers that are there.”
Newer benefits, particularly gadget insurance, may experience further growth as employers’ concerns about providers’ longevity and service levels are eased. “Employers don’t want to offer something unless there is a robust provider in place,” says Mistry-Kandola.
Staff take-up and engagement
Once new benefits have been added to a flexible benefits scheme, employers should bear in mind that it can take time to establish a reasonable level of take-up and staff engagement with these. “Some employees have existing insurance and take up the benefit at a later point,” says Brown. “Other employees will wait until they hear recommendations from their colleagues before selecting new benefits.”
A year from now, it will be interesting to see just how employers’ plans to add these benefits to flex has panned out.