Research 2010: alternatives to flexible benefits

There has been a significant rise in the proportion of employers that do not think their organisation offers enough benefits to flex, says Debbie Lovewell

Implementing a flexible benefits scheme requires time and commitment from employers if they are to fully engage employees with the concept and optimise the plan’s value.

So ensuring the time is right to make the change can be a key consideration when looking to introduce flex.

One-fifth of respondents that do not offer a flexible benefits scheme have considered introducing flex within their organisation, but did not feel the timing was right to do so. The global recession may well have played a part in this, despite being cited by only 4% as the reason behind their decision not to go ahead with their flex plans.

Over the past 12 months, there has been a significant increase in the proportion of respondents that do not believe their organisation offers enough benefits to flex. This has risen to 15% from 5% in 2009.

In some cases, it may be employers have had to reduce perks during the recession and do not want to highlight this to staff.

As the economy recovers, more employers may reconsider introducing flex. Some 16% say they will consider doing so in the future, and a further 9% intend to do so in the next 12 months.


Just under three-quarters of respondents (73%) that do not offer a flexible benefits scheme provide standalone tax-efficient benefits offered via a salary sacrifice arrangement for their staff. This is a slight fall from the 77% that did so last year. It will be interesting to see if this changes further over the coming year, following the government’s plans – and subsequent reversal of these – to withdraw the tax breaks available on childcare vouchers.

But this does not appear to have deterred some employers from going ahead with plans to introduce standalone tax-efficient perks, with 6% looking to do so.

As well as providing employees with a level of choice around their benefits package, the national insurance savings (of up to 12.8%) that employers gain on this type of arrangement can be used to fund other benefits and reward initiatives, including a full flexible benefits scheme.



When planning to implement a flexible benefits scheme, employers could choose to test the water to introduce staff gradually to the concept of choice around their benefits package. One of the most commonly accepted ways of achieving this is by offering a voluntary benefits scheme. This may be why just over half (53%) of those that do not currently offer a flexible benefits plan provide voluntary perks for staff, and a further 10% plan to do so.

Ensuring staff are fully aware of the value of their benefits package can help to boost engagement with a flex scheme. Total reward statements issued before a scheme’s launch are a key way of communicating this and helping to boost staff take-up and understanding once flex goes live.


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More articles on: Employee Benefits/Towers Watson Flexible Benefits Research 2010