Employee benefit administration has been a serious issue for human resources departments for years. The good news is that the enrolment for and administration of many benefits are now available on a paperless basis, cutting delays errors and freeing up valuable resources.
These are non-salary benefits provided to employees as part of their reward package. Typical benefits include pensions, life cover, medical insurance and disability cover and more recently benefits like bikes-to-work and childcare vouchers have also become popular. Tax incentives make it attractive for employers to provide certain types of benefits plus employers will often need to provide these additional benefits to compete with other companies for new staff.
The problem has been the paper work surrounding employee benefits (application forms, health declarations, employee authorisations). Employees interested in enrolling for their benefits would have to complete various forms and then these needed to go to the benefit providers to be processed. Their systems would eventually show the new benefit and charge the employer, often months after the initial application. This caused real problems:
The transition to corporately sponsored individual pension plans (stakeholder and group personal pension plans) and flexible benefits has taken the administration requirements to another level and lately this area has been addressed with the development of IT systems that can process benefits automatically and without delay.
As an example of a practical solution, the latest Stakeholder and group personal pension plans offer automatic entry without employees needing to complete application forms. Concessions from the Inland Revenue allow an employer to submit a list of members and the amount of contributions. Policy documents are issued without delay and contributions taken from employees' salaries can therefore directly match what the pension provider is expecting to receive. This may sound sensible but many companies who operate older style plans do not have access to these systems and administration is still painful and time consuming.
Flexible benefits present a more challenging problem. They tend to offer a menu of benefits and therefore access to a range to product providers, each potentially requiring a different application process. In addition, the use of salary sacrifice means that additional salary alteration documentation is required.
Several software solutions now exist to manage the flexible benefit application and selection process (our Select Benefits for example). Careful plan design will lead to efficient application processes and there are also some providers that have special enrolment arrangement with flex administration service providers. For example, our own service provides access to pensions, life cover, critical illness, dental, and medical insurance without the need to fill in paper application forms.
As things stand, it is now possible to provide benefits using online systems and avoid the need fro application forms. This applies to individual benefit offerings and benefit packages. Many companies with legacy arrangements and older style plans will want to consider switching to the new systems and solutions. Reducing administration errors and delays not only means less resources are soaked up running these plans but the chances of serious mistakes is significantly reduced.
An introduction to flexible benefits.
Practical tips.
The concepts, benefits and issues.
Possible tax advantages of benefits.
Tax credits and their effect on flex schemes.
Eliminate paper forms with a modern benefits scheme.
Incorporating medical insurance in a flex scheme.
How to be effective.
How to ensure things do not go wrong.
Issues for contracts of employment.
Voluntary employee benefits; deals and discounts.
Developing an environmentally sensitive employee benefit package.
Making a real difference.