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Contact: Renay Logan
Tel: +44 20 7178 3553

UK
London, 22 October 2009

More than four out of ten UK employers now give employees some form of choice in the benefits they receive, and a quarter of the remainder are also considering doing so, according to a survey by Mercer. The global survey, of over 1,700 organisations, showed that the trend to offer benefit choice was notably higher in the UK than in many other countries in Europe and other parts of the world.

Of the number of UK employers offering benefit choice, 28 percent now provide some flexibility, while 14 percent offer a considerable amount of flexibility. Additionally, 71 percent of all employers either have definite plans or are looking into the possibility of providing more choice in future.

Jeffrey Fox, a consultant in Mercer’s UK health & benefits business, said: “Clearly, there is a growing trend towards tailoring employee benefits to individual needs, rather than offering a standard package for all. This recognises the fact that employees value their benefits more when adapted to their personal circumstances and, in the case of full flex programmes, when they also understand the costs involved.

“In the current economic climate, many companies have had to hold back on salary and bonus increases, so are focusing on changes to their benefit programmes to motivate employees. Offering greater choice is one area that is currently popular,” he added.

The most important reason for providing choice, cited by 86 percent of UK companies, was to “remain competitive in the marketplace”, while the second most popular reason, at 71 percent, was to “increase employees’ understanding and appreciation of the value of their benefits”.

Success rates for flex programmes
The vast majority of UK respondents agreed that their flex programmes had met their original objectives (84 percent).  In addition, most employers (78 percent) said that the employee response to their programme had been positive. Looking forward, for the next 1-3 years the top priority cited by 62 percent of companies is to “demonstrate to employees the value of their benefits”.  

“The research indicated that employee choice programmes are generally successful in achieving the objectives set by employers. On this basis we would expect the trend towards offering employees greater flexibility to continue – especially as recent advances in technology make these programmes easier and less costly to administer,” said Mr Fox.

UK versus other countries
Regionally, choice in benefits is currently more common in Europe and North America* than in Asia-Pacific or Latin America.  But there is also considerable variation within regions, most notably in Europe.  Employers in the Netherlands, Spain and the UK are the most likely to provide choice (53 percent, 44 percent and 42 percent, respectively) while employers in Italy and Russia are the least likely (13 percent and 16 percent, respectively).

The UK is currently one of the world’s strongest markets for flexible benefit offerings in terms of the popularity and sophistication of benefit programmes introduced.

Types of benefits offered in flex programmes

The most common insured benefits offered in UK flex schemes are private medical care (75 percent) and dental services (69 percent) with eye care, travel, disability and critical illness cover less popular – offered by between 22 and 36 percent of employers.

Amongst other benefits, childcare vouchers are currently offered by 84 percent of organisations although changes in tax reliefs will affect this benefit offering in future.  Bicycle schemes (55 percent) and health screening (53 percent) are relatively popular, whilst the opportunity to buy and sell holidays is one of the most popular benefits, offered by 73 percent of companies.

Fewer than 60 percent of employers include pension plans in their choice programmes, mainly because final salary schemes are more complicated to ‘flex’ than other benefits. However, with the growth of defined contribution plans, pensions are likely to become a more popular element of flex programmes in future.

Notes for editors
For the purposes of this survey, “employee choice” was defined as an arrangement whereby employees may exchange some or all benefits for others or for increased cover, or are given a set budget to “purchase” supplemental benefits.

Comprehensive or “full flex” programmes were defined as having core benefits, optional benefits, credits and a spending account.

*North America is represented only by Canada. The US was not included in the survey as a separate, annual survey is conducted in the US on healthcare and other related benefits. Over 1,700 employers responded globally, and some 135 did so in the UK. 

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Contact: Renay Logan
Mercer Press Office
Tel: +44 20 7178 3553