A growing number of businesses are now applying technology to communicate benefits via an on-line portal, to administer salary sacrifice and broader flexible benefit arrangements.

According to Mercer, more than a third (37%) of survey participants at a UK-wide webcast event for HR and benefit managers said they were planning to introduce technology over the next 12 months to introduce new salary-sacrifice arrangements or streamline existing ones and to provide greater benefit choice and improved communication through on-line access.

Stephen Hempenstall, a principal and consultant at Mercer, said: "Many companies have adopted salary sacrifice for their pension arrangements in the past couple of years, appreciating the significant savings in employer National Insurance that can be had. What we are seeing now is a growing interest in developing technology to automate this process, communicate existing benefits in a more cost-effective and engaging way, apply it to wider benefits such as holidays and voucher schemes, and offer greater benefit choice.

"In some cases, the aim is to create total reward statements and eventually to introduce benefit choice through a fully flexible benefit scheme."

One of the factors influencing this development, he notes, is the growing sophistication of technology, enabling benefit systems to communicate more readily with existing HR and payroll software and handle sophisticated data variables with greater ease.

Hempenstall added: "Online benefit platforms can be introduced at much lower cost than in the past and are now affordable to many medium-sized companies with, say, 200 employees or more. Savings made from salary-sacrifice arrangements will often pay for the new benefit technology within the first year and possibly within only a few months."

Companies with 500 pension scheme members can make potential National Insurance savings of around £100, 000 a year, based on an average salary of £30,000 and an average employee contribution of 5%. These savings will grow with increases in National Insurance contributions due in 2011.