Philip Hutchinson, Pointon York: With the advance of total reward, where the total amount of money spent on the employee is becoming the focus of flexibility rather than just their benefits, flexible benefits is set to evolve into a totally new concept, that of flexible reward.
The main driver for this change is an increased awareness of return on investment, perceived value and, most significantly, employee engagement. There is sufficient evidence now available demonstrating a link between improved engagement, and performance and profitability.
Another catalyst for this evolution is challenging the typical restrictions on flexible benefit schemes in order to achieve true flexibility. This involves the removal of limits other than those imposed by statute, for example, making choices throughout the year, removing scheme spending limits, removing minimum coverage requirements for life assurance, allowing universal trade-up for all employees, and so on.
Next generation flex is more likely to be based on total reward statements supported by individual benefits rather than separate benefit groups. This means that the employee will only see the benefits themselves and the rules that govern them. For example, buying additional private medical insurance will no longer be a ‘flex’ option but just another benefit in a select list.
The first impact of the above will be a more proactive management of the employer’s benefits profile within the context of total reward. It will no longer be possible to treat flex as a separate part of the reward package as all aspects of total reward will need to be designed and managed together.
The second will be the need to improve communication. Flex will no longer just be a nice to have, but rather an important part of improving engagement and managing performance, recruitment and retention. Education will be the key.
Finally, there will be the need for a new breed of systems to administer and communicate this evolution. These new platforms, although they may cost more than established ones, will offer more value for money. This is because they will be based on new and more effective technology, and their designs will be in tune with what modern HR, reward and benefits managers are looking for to improve their competitive edge.
Philip Hutchinson is head of corporate SIPP sales at Pointon York SIPP Solutions