Childcare voucher schemes can hit administration problems, but leading providers are working to improve systems efficiency, says Nicola Sullivan
The government’s announcement that it is to revise plans to phase out all tax relief on childcare vouchers came as welcome news for many employers. But this is not the only issue facing the benefit, with a number of employers reporting concerns about the way schemes are administered and run by providers.
Some working parents have found their carers are not being paid on time, and others have had difficulty in resolving queries or problems quickly. For example, some employees receiving vouchers from Computershare Voucher Services have complained that payments have been taken out of their salary but have not been credited against their Computershare account.
Computershare Voucher Services has admitted it has had teething problems with its new £3 million operating system, launched last October. Company managing director Simon Moore says: “We put a new system in place and with all new systems there will be teething problems. We would have liked it to have gone more smoothly than it has done, but service levels are picking up.”
Iron out difficulties
In its efforts to iron out the difficulties experienced by customers, Computershare has extended its call centre opening hours and employed extra staff to answer queries.
However, childcare voucher providers are bound by strict rules on what information they can divulge. Iain McMath, chief executive officer at Sodexo Motivation Solutions, says data protection issues restrict the information about children that can be provided, which can sometimes make it difficult for carers to reconcile the payments they receive with the children they look after. To get round this problem, childcare voucher providers often create a unique reference number or code name for every child.
Providers also encourage employers to use electronic vouchers instead of paper ones because these speed up transactions between parents and carers. “It works in exactly the same way as a bank account,” says McMath. “Basically, a parent goes online, checks their account and nominates which carer they need to pay. If a parent has a number of different carers, they can put them all on [to their account].
View accounts online
“Carers are also able to go online and view their account. It can show all the payments that have been made. They may have dozens of children that are using vouchers and they can see what payments are due to them and when they are coming in. If both parents receive vouchers, we can group the account so carers get one payment rather than two payments for the child.”
Paper vouchers, which are typically delivered with staff payslips, can be more time- consuming to process because the carer has to post them to the childcare provider to retrieve payment. But it is possible for carers to redeem vouchers online or by phone.
Childcare vouchers are commonly offered through an employer’s flexible benefits programme, so flex consultants and providers are also affected by the efficiency of a scheme’s operating systems. Oliver Bence, senior flex and reward consultant at Benefex, says that although some voucher providers have built-in systems that link to flex, others are not as well equipped to offer the benefit through an employer’s flex platform.
Interaction with flex providers
“Childcare voucher selections through flex are growing and I think voucher providers can make the process easier if they have good interaction with flex providers,” says Bence. “If an employee was to select £243 of childcare vouchers through our flexible benefits system, we would then tell the childcare voucher provider. I would then expect the childcare provider to contact that employee and say ‘here is all the information you need and what you need to do going forward, and this is the information we need from you in order to manage the scheme effectively’.”
Working with providers to create an effective communications strategy can also help employers to ensure a childcare voucher scheme runs as efficiently as possible. This can include posting information on an organisation’s website or intranet site and sending out literature to parents, which can include instructions to pass on to their carers.
“What employers want is a system that is indispensable for people,” says Sodexo’s McMath. “What we want to help the employer do is inform and communicate to staff so they know how easy it is [to use the scheme].”
Good communication vital
Good communication is particularly important if employers are to ensure staff understand how any new legislation will affect them. A case in point was the government’s decision not to phase out tax relief on vouchers completely, but to preserve it for basic-rate taxpayers. Laura Czapiewski, product executive for childcare vouchers at Accor Services, says: “I think the key thing with anything like that is just to make sure there is complete communication and clarity so everyone is aware exactly what the situation is and how it affects them.”
A number of providers, including Accor Services, Computershare Voucher Services, Grass Roots and Sodexo Motivation Solutions, are working with government relations and public affairs consultancy Westminster Advisors to create a trade association and adopt a code of conduct for the industry.
Security of funds is one issue on which the providers will seek common agreement. Lucy Newcombe, marketing director at Computershare Voucher Services, says: “People need to look to their supplier, whatever its size, to protect their money. Where employers are going to come unstuck is if they have endorsed their organisation with a particular supplier that has not got some kind of security. The code of practice should be read by employers before they go out and buy from providers.”
How secure are funds?
Tracy Wilson, operations manager at Imagine Co-operative Childcare, adds: “There are concerns about what happens to the funds if something happens to the voucher provider. How secure are the funds? Are they ring-fenced? Are they protected in the event of the company going bust?”
Data protection is another area where childcare voucher providers are aiming to establish common principles and standards. The code of conduct aims to clarify how often providers should carry out penetration tests to check the security of the data held on their operating systems, as well as establish criteria for checking staff with the Criminal Records Bureau.
Employers will no doubt welcome this initiative to help meet the challenges of running a childcare voucher scheme.
What employers should look for in a childcare voucher provider
- Establish whether a potential provider’s administration processes are efficient and simple to use.
- It is important to know what systems a provider has in place to resolve any problems carers, parents or employers may experience with the running of a voucher scheme.
- Establish what security measures a provider has in place to protect data about children. How often are penetration and hacking tests performed on its administration system?
- What happens to funds held in a childcare voucher scheme if the provider goes bust?
- To what extent can a potential provider help an employer communicate the scheme effectively?
Case study: Avon Fire and Rescue system has few alarms
Avon Fire and Rescue Service launched an online childcare voucher scheme to help attract and retain employees.
In April 2009, the organisation switched its childcare provider to Computershare Voucher Services. In the selection process, Avon Fire and Rescue looked for a scheme that required little administration by its HR department.
Tracey Hedges, HR adviser at the organisation, explains: “We looked for evidence of an efficient and informative helpdesk service, smooth set-up procedure, and online account management for our employees, with minimal administration required by us as an organisation.
“No administration is required other than checking the payroll and signing an invoice each month, which is superb. We now have a smoother and more efficient process, which has been greatly beneficial to both myself and our payroll department.”
Employees can access online ordering and amendment facilities, and can receive vouchers electronically, unlike the previous scheme, which issued only paper vouchers.
Avon Fire and Rescue Service marketed the new scheme to staff through its intranet site. Leaflets and payslip attachments were also issued to employees as part of the campaign, which featured images of children dressed up as firemen.