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It was pleasing from this research to see that so many who offer a flexible benefits plan felt the were effective in improving retention (45%), aiding recruitment (51%), showing employees the value of benefits (62%) and increasing the employee perception of the package (55%).
However, many flex plans in place have been round for a number of years and employers are looking at ways to improve and enhance what they offer. Also, where new flex plans are being introduced, employers want to make sure they are leading the pack in terms of new developments and introducing something that is fresh.
Flex has now been part of the UK benefits scene for a long time and I am often being asked ‘where to next with flex?’. A key theme I keep hearing is: how can we make our offering truly flexible and integrated into our total reward package? This, in particular, relates to the company-paid element of the benefits package, where many plans only offer very limited flexibility, requiring a minimum level of risk benefits such as life assurance and private medical insurance, and do not permit employees to “flex out” of key benefits such as a pension. Some of this lack of flexibility is driven by the insurance market and the likely impact on benefit costs, but there is still a large element of paternalism that holds organisations back from allowing employees a free rein.
However, we are starting to see some employers who are prepared to tackle this issue. This includes some large employers that give employees the ability to vary the majority of their flex fund including the most significant element, the pension contribution. This allows employees to own their package and decide how they want it delivered. While some of this flexibility around pension contributions will be impacted with the introduction of personal accounts, there is likely to continue to be scope for many employers to offer this flexibility.
The benefits of giving employees such ownership of their reward package are significant. Research has shown that substantial improvements in employee appreciation of the same benefit spend can result when employees have a real opportunity to shape their package to one they value.
Doing away with some of the enduring paternalism and allowing employees to take ownership of their reward raises another very relevant theme, that of financial education. Giving employees greater flexibility and choice comes with an increased need for information and education. How much this responsibility falls to employers is debatable, but I believe that investments in this aspect will always reap rewards in terms of increased employee satisfaction.
So, whether you have an existing flexible benefits plan or are thinking about introducing one, think about the opportunities available from embracing a more modern deal on flexibility. If you, like many organisations, are investing in flex and are looking for the return on that investment by measuring the impact on the bottom line, this approach could provide a firm foundation for delivering results.
Jacqueline Otten, principal at Towers Perrin
The views and opinions in this article are those of our sponsor, Towers Perrin HR Services, and do not necessarily reflect those of www.employeebenefits.co.uk.