What is flexible benefits technology?
It is a technology system, operating in-house or from cloud-based servers, that provides a platform to deliver a flexible benefits scheme. Increasingly, systems are designed to interface with other elements of benefits and reward, including pensions, and often have interactive and data-modelling tools that can be used by employees.
What are the origins of flexible benefits technology?
The first systems were put together about 25 years ago, but these were largely based on simple spreadsheets and in-house IT.
What are the costs involved?
This will depend on the number of employees and the degree of system sophistication required. Advisers estimate that for flex technology only, where an employer manages the back-end administration, costs can start from £4 per employee. This can rise to about £8 per employee if admin management is included. A helpline will also add cost. Implementation costs can run into hundreds of thousands of pounds, with many providers prepared to offer employee volume-based discounts.
What are the legal implications?
The system must comply with data protection regulations.
What are the tax issues?
HM Revenue and Customs’ rules around salary sacrifice arrangements will apply to any flexible benefits offered.
Where can employers get more information and advice?
There is no industry body for flexible benefits technology, so employers should speak to several providers and, if possible, other organisations that have already introduced a flexible benefits system .
What is the annual spend on flexible benefits technology?
It is impossible to evaluate the market without a central body to collect this data.
Which flex technology providers have the biggest market share?
Leading providers include Aon Hewitt, Benefex, BHSF, Capita, Co-operative Flexible Benefits, Edenred, JLT, Lorica Employee Benefits, Mazars Employee Benefits, Mercer, NorthgateArinso, Personal Group, Staffcare, Thomsons Online Benefits, Towers Watson and Vebnet.
Which providers have increased their share most in the past year?
There is no central organisation to provide specific market data, but consolidation through strategic partnering and acquisitions is likely to enable providers to increase market share.
- 63% of employers use their technology provider to run their flexible benefits plan
- 66% of employers consider cost a barrier to flex scheme implementation
- 32% of employers structure their flex scheme to enable employees to take tax-efficient benefits via a salary sacrifice arrangement, promoted as part of a cohesive flexible benefits package
- 18% of employers that do not offer a flex plan out of the UK are considering doing so.
Employee Benefits ’ Benefits Research 2013 , published in May 2013, shows that the proportion of employers that offered some, or all, benefits to all staff via a flexible benefits plan rose from 19% in 2007 to 24% in 2013.
Flexible benefits schemes enable employers to offer staff a wide range of benefits cost-effectively through, for example, salary sacrifice arrangements , which offer tax and national insurance savings for both employers and employees.
Technology has had to evolve considerably to respond to this demand, as well as keep up with the increasing pace of life and employees’ desire to access their benefits from a wide range of devices, including their office computer, home computer and mobile devices.
Flex providers have also been under pressure to respond to employees’ demands for streamlined access to all their benefits via a single technology platform.
This has resulted in some employers investing in, and developing, their flexible benefits proposition to enable them to integrate their entire perks package onto a single-branded platform with single sign-on functionality. This enables staff to sign in to all their benefits using a single username and password, regardless of the benefit they want to access or the provider behind it.
Single sign-on technology also enables HR and reward professionals to access the same system at various levels remotely, to view employee activity, produce management reports and target communications , streamlining the administration process. This is proving particularly useful for employers that want to globalise their flex platforms.
A number of global employers are currently centralising their benefits strategies , including flex, and are demanding multi-language and multi-currency flex platforms.
But while the intricacies and complexities of the back end of flex platforms has increased, providers are simplifying the front end to maximise staff engagement.
More appealing platform interfaces and user-friendly functionality are becoming increasingly common, and some platforms have introduced feature slider bars, enabling staff to select their required number, or levels, of benefits just by using their mouse, rather than having to type them in.
But the biggest development in the past year has been platform providers’ use of social media-based functionality . For example, some platforms are using Facebook-style pages that enable employees to ‘like’ benefits and view their peers’ perks preferences.
But this is a new phenomenon, so it is too early to tell whether this trend will continue.
One trend that is here to stay is the ever-evolving choice of flexible benefits that platform providers are catering for. New-style flex benefits include insurance for gadgets such as mobile devices, and bring-your-own-device computer schemes , which may be offered via a salary sacrifice arrangement.
Micro-P and Let’s Connect are two IT device providers that are catering for employers’ technology needs.
Platform providers have also had to develop technology enabling employers to create and administer multiple enrolment windows for new-style benefits, such as mobile phones , because their contract renewal dates may not coincide with an employer’s annual flex window.
Another new trend is health accounts, jointly funded by employers and employees, which give staff access to healthcare benefits that link to, and support, their employer’s wellbeing strategy.
Similarly, retirement planning-related benefits, such as independent financial advice and group risk benefits that support older workers, are slowly being introduced.
The maturity of the flex market, which spans more than 20 years, and the growing range of providers means that the cost of flex technology has actually declined, putting some fairly sophisticated technology within the reach of smaller employers.
From employee benefits consultants and financial advisers to online technology services, employers of any size can now access flex technology for their workforce.
Advances in technology and software are helping flex schemes realise their true potential for employers and employees. With real-time flexibility and systems that can be adapted to align with key stages in employers’ reward cycles, or even employees’ personal preferences, the technology can offer true flexibility.
But employers should not assume that all flex systems offer the same level of sophistication at the back end simply because they look the same at the front end.
A flex platform may appear to offer a workforce the right level of information, and in an appropriate format, but an employer should ensure the platform has the back-end capability to provide, for example, the required level of interconnectivity with other benefits and systems, such as payroll and pensions.
Also, employers with an established flex platform should be sure to consider their internet connection, as well as their firewall, in any review because these, rather than the technology itself, could be responsible for any speed issues.