- 90% of employers say increasing employee engagement and understanding of benefits is important, yet just 36% have a specific communication strategy in place
- Main overall objectives for implementing online/flex are: employee engagement, choice and retention. However, Aon warns of danger in lowest-rated objective of governance.
- Most popular benefits: childcare vouchers, cycle to work and pensions; dental and buy/sell holidays decrease in popularity
- Salary sacrifice consultations have probably impacted employer intentions, yet existing Tax and National Insurance treatment of pensions, childcare vouchers and bicycles remain unaffected
LONDON (28 February, 2017) - Aon Employee Benefits, the UK health and benefits business of Aon plc (NYSE: AON), says that its annual Benefits and Trends Survey shows that 90% of organisations deem it important to increase employee engagement and understanding of benefits packages, yet only 36% have a specific benefit communication strategy in place. The survey received more than 200+ responses from HR professionals in a wide range of roles and industry sectors from across the UK.
Among the survey's key findings are that the main objectives for implementing online for flexible benefits are to increase employee engagement (85%), employee choice (76%) and retention (67%). However, Aon warns that one of the lowest-rated objectives - governance (11%) - makes it difficult for employers to understand whether a scheme is fit for purpose or whether objectives are met. A third of respondents said they could not judge whether their scheme had delivered against objectives as they were not measuring this outcome.
The most popular benefits present on flex schemes this year were (in order of popularity):
- childcare vouchers (88%)
- cycle to work schemes (79%)
- pensions (70%)
Last year, cycle to work schemes (87%), buying/selling holidays (72%) and dental insurance (71%) were the most popular. Within Aon's own flexible benefit clients, the most popular in terms of employee take-up were income protection (79%), pensions (77%) and life insurance (72%).
Jeff Fox, principal at Aon Employee Benefits, said:
"The staple objectives for implementing flexible benefits are employee engagement, choice and retention. As it remains the best tool to offer choice to employees, we believe flex has a bright future.
"However, it is surprising that governance was one of the lowest-rated objectives, with just 11% judging it important. Our view is that this needs to change as a lack of governance makes it very difficult to know whether the scheme is fit for purpose or if objectives are met. It is also very difficult to prove return on investment. Indeed, a third of respondents weren't sure how or if they were measuring the success of their schemes."
This year's survey also shed light on employer actions and intentions of recent changes in legislation. It appears, in direct response to the government's Salary Sacrifice Consultation and complications around pensions and National Insurance, an increasing number of employers have no plans to introduce online or flexible benefits.
Jeff Fox continued:
"We see this as a surprising and unhelpful outcome. The existing treatment of pensions, childcare vouchers and bicycles remain unchanged in the consultation, and the survey shows that these are the most popular benefits on a flexible benefits scheme. This is perhaps not surprising as they deliver the greatest value to employers and employees. Pension alone normally accounts for 80% of an employer's salary sacrifice savings. Indeed, 75% of those with salary sacrifice arrangements in place are looking to maintain them because of the tax efficient arrangements."
The benefit landscape is, as ever, experiencing a number of headwinds. Although this survey suggests benefit professionals are struggling to work with some of the uncertainties, now is the time to form a business relevant benefit strategy. Benefits expenditure must be justified in more comprehensive ways, beyond the 'easy' financial return which the comfort blanket of salary sacrifice has provided. While employers continue to enjoy the savings, it is not clear how long they will be able to do so.
Download the full Benefits and Trends survey report here.
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