Survey of employee choices in flexible benefits

FLEXIBLE BENEFITS

Survey of employee choices in flexible benefits

Research into flexible benefit schemes across a range of companies shows clear differences in the choices made by different employee groups, a study by Mercer shows. 

Apart from pensions and private healthcare – where the variance in core entitlement can skew take-up results – the popularity of insured risk benefits and various lifestyle benefits varies by age, gender and income, with potential consequences for how employers design their schemes and communicate with employees.

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Overall, the popularity of flex schemes continues to be high across the general employee population, with up to 80% of employees making annual changes to their benefit choices in some organisations.

Under-30s less likely to take part in flex

Younger employees in their 20s are much less likely to participate in a flexible benefits scheme compared to older colleagues. Mercer reckons this is primarily because the main focus of many products included in flex schemes is on risk-based or lifestyle benefits, which are more relevant to the needs of employees with dependants.

Mercer’s analysis shows that:

• The overall participation rate in flex for employees in their 20s is on average 47%, compared with 67% to 70% among older groups (30s to 50s).
• Take-up for partner life assurance is just 5% for employees in their 20s, but this rises to 15% for people in their 30s.
• Critical illness similarly rises from 13% to 22% respectively and personal accident insurance from 12% to 17%.

“Employers need to think more about the needs of generation Y in making benefit provision for their employees. Considering their lifestyle needs, more should be done to support them in meeting the financial burdens they face – in particular, the need to pay off student loans and secure their first homes,” said Tony Morgan, a principal at Mercer.

Gender differences less marked

Mercer’s survey showed that the main differences in take-up were according to age and income; differences based on gender were less pronounced. However, a noteworthy finding was the difference between men and women in the popularity of buying and selling holidays:

• 19% of women purchase extra days’ holiday and this is the most popular benefit to be traded up by this group.
• By contrast, this benefit is less popular with men (11%). Indeed, men are also more likely to sell their holidays (9% compared with 3% of women).

A final word

“As part of a company’s employee reward and engagement strategy, flex can deliver high value to employees since they generally appreciate the choices offered to help them meet their particular lifestyle needs. With advancements in technology and set-up costs now much more affordable, more employers are taking an interest in flex as a means of generating additional value for employees while managing their benefit costs more effectively. This is particularly important in today’s challenging times when companies are balancing the need to prune costs with the drive to maintain employee engagement and motivation.” - Tony Morgan, a principal at Mercer

Want to know more?

Availability: For questions about a Mercer survey purchase or to participate in a survey, email client.services.europe@mercer.com or tel: +48 22 434 5383.

Mercer is a “leading global provider of consulting, outsourcing and investment services”. Its 18,000 employees are based in more than 40 countries. For more information, visit www.mercer.com.