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Auto-enrolmentBenefitsChildcareCycle to WorkDental care

10 benefits to include in a flexible benefits scheme

by Sarah McCarthy 24 Aug 2017
by Sarah McCarthy 24 Aug 2017

Flexible benefits schemes can help to boost employee recruitment and retention by increasing the range of benefits available to employees. Here, Sarah McCarthy highlights 10 benefits that employers commonly offer in a flex scheme.

XpertHR survey

XpertHR benefits and allowances survey 2017

1. Buying or selling annual leave

Employees can increase their leave entitlement through buying a limited number of additional leave days, or sell them back to their employer for cash if they prefer not to use their full entitlement.

For each day of leave that an employee buys, the employer’s salary bill is reduced and they save the national insurance contributions that would have been payable.

It allows employees to take extra leave with a reduced impact on their net pay.

 

2. Bicycle loans/cycle to work scheme

Most commonly offered on a salary-sacrifice basis, a cycle-to-work scheme enables the loan of a new cycle and safety accessories to employees for cycling to work.

There are also tax benefits for the employer and the employee. Advantages for the employer are:

  • encouraging healthier and more productive employees;
  • saving on national insurance contributions;
  • cutting the company’s carbon footprint; and
  • reducing the need for car parking spaces.

Advantages for the employee are:

  • offering significant savings on a new cycle and accessories;
  • reducing commuting costs; and
  • improving health and wellbeing.

 

3. Childcare vouchers

A popular benefit, employers provide parents with childcare vouchers through a salary-sacrifice scheme. The vouchers help working parents to save tax and national insurance on their childcare costs.

However, in April this year the Government introduced its new Tax-Free Childcare scheme. This means that, from April 2018, new entrants to the scheme will not be permitted.

Parents already in the scheme will be able to remain in it for as long as they require.

 

4. Pension contributions

Since the introduction of pensions auto-enrolment employers are required to enrol specified workers into a qualifying pension scheme, and employers and employees make mandatory contributions.

Many employers give staff the opportunity to increase their contribution levels by opting to make additional contributions on a salary-sacrifice basis as part of a flexible benefits scheme.

 

5. Private medical insurance

Private medical insurance is sometimes offered to senior staff and directors only as it is costly to provide. Where staff receive the benefit, it is often single cover for themselves only.

XpertHR guidance

How to introduce and manage a flexible benefits scheme

Including private medical insurance in a flexible benefits plan not only gives the whole workforce the opportunity to access the benefit, it can also allow employees to extend the scope of cover from the individual to their spouse and/or family members.

However, employees receiving the benefit will be liable for income tax on the premiums paid.

 

6. Gym membership

Employers will often be able to secure a corporate discount to a local or national gym to include in their flexible benefits plan.

Gym membership encourages employee wellbeing and can help to reduce illness.

 

7. Healthcare cash plan

Healthcare cash plans are designed to cover (in part or in full) the cost of everyday healthcare expenses.

For employees not covered by a private medical insurance scheme, they are a less-expensive alternative that helps to reduce the costs of accessing private medical treatment.

These schemes can help to keep staff healthy and motivated and reduce unexpected absenteeism.

 

8. Life assurance

Also known as death-in-service benefit, a life assurance policy provides a tax-free lump sum if an employee dies.

Where provided by employers, a life assurance policy typically offers a payment of four times salary or three times salary, but employees may be able to increase these multiples within a flex scheme.

 

9. Health screening

Health screening is another benefit that promotes employee wellbeing and shows that employers value their staff.

A regular health check-up is provided, allowing any issues to be identified for early treatment before they lead to time off work or hospital care.

Often limited to senior staff when given as a core benefit, access can be extended by inclusion within a flexible benefits programme, and the premiums may be lower than employees would be able to secure elsewhere.

 

10. Dental insurance

Dental insurance usually covers the cost of routine appointments and some additional treatments such as fillings or to treat injuries.

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It can also be put towards more expensive procedures such as implants, root-canal treatment and orthodontics. It can help to reduce sickness absence by encouraging employees to attend regular check-ups.

Again, employees pay the premiums themselves but prices can often be lower than in the marketplace.

Sarah McCarthy

Sarah McCarthy was an HR Practice Editor at XpertHR, responsible for producing content on pay and benefits.

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