Employee benefits - increasing the effectiveness of benefit spend

“I don’t think simply doing market reviews for clients to drive down the price is sufficiently valued to really justify consultancy,” said Anderson. “We have seen a reduction in average fees on standard services such as risk-broking; providing market reviews for risk products.

“What we need to do is to ensure both the provider and ourselves can deliver those services effectively, but also to identify other ways we can add value to clients.”
Among the extras what clients are asking for is helplines and Anderson sees this as an emerging trend in the added-value stakes.

“We are talking to a number of clients about establishing helplines for their pension migration programmes,” he said. “We are also looking at technology which will allow employees to access advice through Q&As. I think we will be seeing more of this.”

For Howorth, cost is obviously a part of the equation, but added: “I think if demands from clients are increasing, it is about giving them more. They are saying: ‘Give me creativity, give me more ideas’. There is a lot more of ‘give me more’ rather than ‘charge me less’,” he said.

This value-for-money approach is echoed by Anderson at Mercer.
“We are finding that cost is a factor but it is actually value for the same cost that really makes a difference,” he said. “Clients are now more receptive and questioning the impact of the benefits being provided.”

There is also a good deal of what Chadwick highlights as the emerging trend of placing more onus on the employee in ownership of their own benefits package.
“We are seeing people wanting to continue with certain benefits but saying the employee needs to pay more,” he said.

This of course raises the whole issue of salary sacrifice as another area where savings can be made. Chadwick is always amazed when he comes across companies who are not willing to entertain the idea of salary sacrifice, but it is not always an idea that plays well with staff.

Malia agreed: “From an employee’s perspective, it is a hard sell. From the HMRC perspective there are certain ways you’re allowed to promote these schemes so you have to be careful, the imagery employed and so forth.”

Looking ahead, while it may be possible to get better value for money from providers, there are almost certainly bargains to be had in the current competitive marketplace. Any company which has not re-brokered its benefits package over the past two years should go back and review it straight away.

But, as important as a market review might be, there are other considerations to be weighed up. Effective communication of the benefits package and listening to employees’ feedback could produce saving and also provide a more efficacious insight on investment returns.

Chadwick offered a succinct summation: “There has been a lot of research done on what the cost of employee attrition is. It is rather more difficult to establish how many employees don’t leave firms with good, high-profile pension and benefits schemes. “If we had scrapped all our benefits, how much higher would our employee turnover have been?”