EMPLOYEE BENEFITS
Survey finds increasing trend to offer benefit choices to employees
More than four out of ten UK firms now give employees some form of choice in the benefits they receive, and a quarter of the remainder are also considering doing so, according to a survey by Mercer. The global survey, of over 1,700 organisations, shows that the trend to offer benefit choice was notably higher in the UK than in many other countries in Europe and other parts of the world.
Key survey results
1. Trends in benefits choice
Among the UK employers offering benefit choice:
28% now provide some flexibility.
14% offer a considerable amount of flexibility.
71% of all employers either have definite plans or are looking into the possibility of providing more choice in future.
2. Success rates for flex programmes
The vast majority of UK respondents agreed that their flex programmes had met their original objectives (84%).
In addition, most employers (78%) said that the employee response to their programme had been positive.
Looking forward, for the next one to three years the top priority cited by 62% of companies is to “demonstrate to employees the value of their benefits”.
3. Why offer choice?
The most important reason for providing choice, cited by 86% of UK companies, was to “remain competitive in the marketplace”.
The second most popular reason, at 71%, was to “increase employees’ understanding and appreciation of the value of their benefits”.
4. Types of benefits offered in flex programmes
The most common insured benefits offered in UK flex schemes are private medical care (75%) and dental services (69%), with eye care, travel, disability and critical illness cover less popular – offered by between 22% and 36% of employers.
Amongst other benefits, childcare vouchers are currently offered by 84% of organisations, although changes in tax reliefs will affect this benefit offering in future.
Bicycle schemes (55%) and health screening (53%) are relatively popular, whilst the opportunity to buy and sell holidays is one of the most popular benefits, offered by 73% of companies.
Fewer than 60% of employers include pension plans in their choice programmes, mainly because final salary schemes are more complicated to “flex” than other benefits. However, with the growth of defined contribution plans, pensions are likely to become a more popular element of flex programmes in future.
Jeffrey Fox, a consultant in Mercer’s UK health & benefits business, said: “Clearly, there is a growing trend towards tailoring employee benefits to individual needs, rather than offering a standard package for all. This recognises the fact that employees value their benefits more when adapted to their personal circumstances and, in the case of full flex programmes, when they also understand the costs involved.”
He added: “In the current economic climate, many companies have had to hold back on salary and bonus increases, so are focusing on changes to their benefit programmes to motivate employees. Offering greater choice is one area that is currently popular.”
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UK versus other countries
Regionally, choice in benefits is currently more common in Europe and Canada than in Asia-Pacific or Latin America. But there is also considerable variation within regions, most notably in Europe. Employers in the Netherlands, Spain and the UK are the most likely to provide choice (53%, 44% and 42%, respectively), while employers in Italy and Russia are the least likely (13% and 16%, respectively). The UK is currently one of the world’s strongest markets for flexible benefit offerings in terms of the popularity and sophistication of benefit programmes introduced.
Mercer’s definitions
A final word
“The research indicated that employee choice programmes are generally successful in achieving the objectives set by employers. On this basis we would expect the trend towards offering employees greater flexibility to continue – especially as recent advances in technology make these programmes easier and less costly to administer.” - Jeffrey Fox, a consultant in Mercer’s UK health & benefits business.
Want to know more?
Title: Mercer's Employee Choice Survey, Mercer, October 2009.
Survey sample: Over 1,700 employers responded globally, and some 135 did so in the UK.
Availability: To view and buy Mercer surveys, visit http://uk.mercer.com/surveys.
Mercer is a “leading global provider of consulting, outsourcing and investment services”. It works with clients to “solve their most complex benefit and human capital issues, designing and helping manage health, retirement and other benefits”. Mercer’s 18,000 employees are based in more than 40 countries. For more details visit http://uk.mercer.com/home.htm.