If you read nothing else, read this …
• Corporate wraps encompass services offered by life, pensions and savings specialists, and technology platforms that integrate and offer pensions, savings and other financial products.
• Pensions auto-enrolment legislation and implementation could result in more employers looking to offer wraps to their staff and to buy third-party solutions.
• Over time, corporate wraps’ ability to manage complex financial products is likely see them include flexible benefits as a matter of course.
Corporate wraps could prove the ideal vehicle to convey flexible benefits to staff, says John Charlton
Corporate wraps could revolutionise the ways in which employers offer benefits to staff. For now, though, the question of whether and how they will incorporate flexible benefits remains open.
In March, Standard Life launched its corporate wrap Lifelens, which incorporates flex options and technology. Jamie Jenkins, head of corporate strategies and propositions at Standard Life, says: “Some suppliers call this a corporate wrap, but we call it a benefits platform. Currently, apart from the usual flex options, it features pensions and individual savings accounts [Isas].”
But Hargreaves Lansdown and Mercer take a different approach. Hargreaves Lansdown’s corporate wrap Corporate Vantage, which was launched in July 2010, includes a self-invested personal pension (Sipp), an Isa, and fund and share accounts. Alex Davies, the firm’s corporate and pensions managing director, says: “Employees can see and manage all of these benefits on one online platform. They have a choice of 2,500 funds as well as shares, cash, investments trusts, gilts and bonds.”
Corporate Vantage operates alongside flexible benefits platforms, but does not include these. “Our wrap is compatible with all of the major flex providers and we run a number of schemes successfully in this way,” says Davies.
Meanwhile, Mercer’s wrap approach is to offer access to a number of savings products, including Isas, unit trusts and defined contribution (DC) pension schemes. While these products are provided by the likes of Zurich, Standard Life and Friends Life, Mercer uses its own investment and operational governance services. The corporate wrap, called Mercer Workplace Savings was launched in June and can include flexible benefits if that is what an employer wants.
Emma Douglas, head of Mercer Workplace Savings, says: “For some employers, full integration between their flexible benefits systems and a workplace savings platform is high on their list of priorities and, ideally, they want both solutions delivered through one platform, or at least via single sign-on, or with a data feed between systems if separate systems are used. Other employers have been happy to keep the two completely separate, arguing that a flex platform is only open for a fixed window, say 28 days, at one point during the year.”
One major difference corporate wraps may make in the workplace is to boost employee engagement with benefits systems. With flex, staff tend to make occasional visits and choices, with many schemes offering an annual election window. “With a wrap, there is an incentive to go back every day, for example to see how their pension and investments are performing,” says Davies.
But corporate wraps will have to offer extra features to increase staff engagement. These will be guides and financial education features such as videos and calculators.
But these are early days in the life of the corporate wrap. Early adopters are almost certainly all large employers. Standard Life has 10 clients, while Hargreaves Lansdown has more than nine, although it will not give a precise figure.
According to James Markham, managing director of benefits platform specialist SBC Systems, auto-enrolment into occupational pension schemes is likely to drive many more employers to adopt corporate wraps that include integrated benefits options.
“Once a corporate wrap provider has made the investment in the rules engine and workflow manager required to be the administrator for the auto-enrolment service offering, the addition of other benefits administration, including flex, will be achievable at a very low marginal cost,” he says. “At that point, employers will be offered a price for a fully integrated benefits platform that will be hard to refuse.”
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