FLEXIBLE BENEFITS
Flex could be the answer to spiralling pension costs
Employers should consider flexible benefit plans to manage their spiralling pension costs and to help retain their final salary schemes, says Mercer Human Resource Consulting.
Flex plans offer employees a choice in the type and level of benefits, up to a maximum value. Typically plans include a range of benefits such as pensions, holidays, healthcare and other insured benefits. Their attraction, for employees, is that they can be tailored to suit affordability and individual lifestyles. Some companies provide a core level of pension as part of the plan which employees can choose to enhance each year in exchange for other benefits in their reward package, or through a deduction from payroll.
Sharing increasing pension costs
According to Peter Bowers, European Partner at Mercer: "A major benefit is that flex plans allow companies to share their increasing pension costs more easily with employees. They can then continue sponsoring their final salary schemes on a more affordable basis."
What's more, if the cost of the pension grows, companies have the ability to pass part of this increase onto employees each year through the flex plan employees can then either meet this extra cost or accept a lower level of benefit. "Costs are shared with employees in a way that gives them more control over the level and type of benefit they receive," says Bowers.
Want to know more?
Mercer Human Resource Consulting helps "organisations create business value through their people". It employs over 3,000 staff in 17 office locations in the UK. To find out more visit www.mercerhr.com
Posted 1 September 2003