Employers favour flexibility in benefits packages

Giving employees a choice over their benefits package can have a positive impact on their engagement. There are a number of ways in which employers can do this.

Research by XpertHR found that the most popular way of offering flexible benefits is to provide them on a salary-sacrifice basis.

Almost six employers in 10 (59.8%) allow employees to give up part of their salary in return for benefits, including childcare vouchers, additional pension contributions and bikes through a cycle-to-work scheme. Schemes can be administered in-house, and could attract national insurance savings for the employer.

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Voluntary benefits packages are made available by around one-fifth of employers, and they do not necessarily require a significant input from them. Around 70% of the organisations surveyed by XpertHR that offer voluntary benefits use an external provider to administer the scheme, with only one in five managing it solely in-house. Benefits most likely to be available to employees in this way are retail discounts or vouchers, gym membership and dental insurance.

Flexible benefit schemes can, however, be complex for employers to administer. Just 12.3% of survey respondents have a fully flexible scheme, although many employers allow limited flexibility, such as the buying and selling of holiday. The top five benefits available in such schemes are:

• childcare vouchers – offered in 87.2% of flexible benefits schemes;
• pension contributions – 66.7% of organisations offer employees the option to vary the level of their pension contributions;
• private medical insurance (PMI) – ordinarily PMI is often limited to higher-grade employees, but 66.7% of flexible benefits schemes include it as an option;
• dental insurance – rarely a core benefit, but 64.1% of organisations include it in a flex plan; and
• cycle-to-work schemes – often administered via salary sacrifice, they are included in the flex scheme at 64.1% of organisations.