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Employers in the dark about costs of flexible benefits

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More than half of employers think launching a flexible benefits scheme would increase their costs, although more than three in 10 have saved money using such schemes, according to Mercer.

More than half of employers think launching a flexible benefits scheme would increase their costs, although more than three in 10 have saved money using such schemes, according to Mercer.


A total of 55% of employers believed that setting up a flexible benefits scheme would actually increase their costs. Yet 39% of those with flex schemes said their benefit costs were lower than they would have been without a flex scheme - and 45% said their costs had been unaffected.
 
John Puddephatt, senior consultant at Mercer, said: "When put into practice, flex can be an effective vehicle for managing and reducing company costs. Putting a limit on employer contributions to employees' benefit packages does this. As costs increase, employees can elect to reduce their benefit levels, increase their own contributions or switch to another benefit."


"Employers can also make benefit adjustments that help to reduce tax and National Insurance contributions. Examples are salary-sacrifice programmes for pensions and other benefits," Puddephatt added.

But only 11% of respondents to Mercer's survey said that the most important reason for introducing flexible benefits was to reduce or control the company's contribution to benefit costs.


In the survey, a third of employers said that they aimed to reduce their current benefit spend in 2010 and 45% said they planned to reduce benefit cost increases over time.

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