This article is brought to you by Prudential.
Employees are looking to their benefits packages to give them greater control of their personal finances and wellbeing by allowing them to buy cover according to their needs, says Martyn Phillips, director of employee benefit solutions at Prudential
To remain fresh and exciting requires innovation and the ability to adapt in a changing environment. Flex is no different. As employees’ lifestyles and circumstances change, so too will what they desire from a benefits scheme.
With a decline in reliance on the state for pension and health provision, employees are looking to take greater control of their personal finances and wellbeing. This shift will see staff looking towards their benefit packages to allow them the freedom and flexibility to suit their circumstances. This will place a greater emphasis on a flexible total reward approach by allowing staff to use as much or as little of their salary as they want on benefits. We are starting to see this approach more, with a number of leading organisations placing the product value into salary, therefore increasing the level of flexibility for staff.
In a cash-rich, time-poor society, employees are seeking a better quality of life outside of the workplace and want the products and flexibility to enable a healthy work-life balance in addition to the more traditional benefits. Flex provides the framework to support this desire as progressive companies look to integrate innovative concepts. These include using holiday trading and the banking of annual leave to fund a career break or sabbatical, the reallocation of employer pension contributions to help pay off student debt, learning and wellness accounts and other lifestyle products to assist with personal development.
Technological developments are enabling flex systems to become more integrated with HR and payroll tools. An online system may provide employees with access to view their payslips, for example, or to see employee records, including past performance reviews and the ability to track holiday requests. By further linking online reward schemes to a fully-integrated HR and flex system, performance bonuses can also be banked and traded for benefits.
The jury is still out on what affect age discrimination legislation will have on flexible benefits. Group risk products would appear to be the most likely to be affected by the removal of the compulsory retirement age, while other age-related benefits may be removed from flex schemes completely as employers fear an expensive discrimination lawsuit. Further changes to flex may come as pressure mounts for legislative amendments to open up benefits not currently available to employees on the national minimum wage, such as childcare vouchers through salary sacrifice. Other developments that may have an impact could potentially include tax and national insurance (NI) incentives similar to childcare vouchers for elderly relatives and, with a growing focus on the environment, the government could also look to encourage carbon offsetting products to be made available to employees via flex. Although future legislative changes may impact on tax and NI efficiencies on certain products to fit the government agenda at the time, the concept and benefits of salary sacrifice are likely to remain unchanged.
With an increasing number of schemes being implemented, flex is starting to become the norm in larger organisations, whilst reducing costs means it is now also more accessible to smalland medium-sized organisations.
As flex continues to evolve, its design, technology and flexibility will be the key areas of development, while more innovative concepts and products will continue to be included in a bid for schemes to remain fresh.
The views and opinions in this article are those of our sponsor, Prudential, and do not necessarily reflect those of www.employeebenefits.co.uk.