MORE workers are taking advantage of the flexible benefit packages offered by their employer, with a growing range of personal and financial benefits now available.
According to research carried out by employee reward consultancy Thomsons Online Benefits, the percentage of companies offering a flexible benefit package has grown from 5 per cent in 2004, to a fraction under 24 per cent this year.
But what exac
tly are flexible benefits? Traditionally, workers have been offered a basic wage and there was probably a pension scheme they could join or a group life insurance policy they could take advantage of. Now, companies increasingly offer a menu of benefits from which staff can pick what they want, up to a certain budget.
Pension schemes and protection insurances still make up the core of the benefits offered by most companies, although increasingly employees can now chose what level of cover they want from the insurance policies on offer. They can then mix these benefits with a wide range of newer options.
These include the ability to use part of their salary to buy child care vouchers, buy shares in the company every month, buy or sell holidays, or buy bicycles through tax-efficient schemes.
Because employees are buying into these benefits with their gross salary, they are not paying tax or national insurance and so the money they spend goes a lot further. The saving is up to 41 per cent for a higher-rate taxpayer.
"Flexible benefits are very important and basic salary is significantly less important than it was even five years ago," said Adam Gordon, head of marketing at recruitment firm Rise Group. "There is always competition for the best people and companies need to offer smarter options. The big companies are working harder than they have ever done on this."
If firms want to employ a diverse workforce with a diverse range of skills, then it is only right they seek to offer a diverse range of flexible benefits to cater for their employees across the board, added Gordon.
There are also a growing number of employers offering staff the option to use part of their gross salary to buy shares in the company each month. This is a tax-efficient way of saving that gives employees a stake in the company they work for and allows them to share directly in its success.
Ifs ProShare is an organisation that seeks to promote the benefits of employee share ownership and according to Julie Richardson, head of employee share ownership for the group, demand from both companies and their employees is rising.
"Increasing numbers of companies are recognising the benefits of offering their employees the opportunity to participate in share plans. Fifty companies launched new save-as-you-earn plans in 2007 and we expect a similar figure in 2008."
Bob Purves, a senior benefit consultant for actuarial and benefits consultancy Buck Consultants in Edinburgh, (see case study) has taken full advantage of the flexible benefit scheme at his own firm, as well as helping clients set up their own schemes. "Flexible benefits are a lot more popular and both the employer and the employee can get what they want, allowing people to take ownership on both sides."
