Growing Number of UK Companies Planning to Automate Pensions and Benefits Via Technology - Mercer

  02 September 2010 (PLANSPONSOREurope.com) A growing number of companies are planning to introduce technology platforms to automate their pension and other salary sacrifice arrangements and at the same time enhance the communication and flexibility of their benefit programmes, according to a survey by 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.

“Many companies have adopted salary sacrifice for their pension arrangements in the last 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”, said Stephen Hempenstall, a principal and consultant at Mercer. “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.

 He added: “On-line 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.

Hempenstall added: “Pressure to secure greater employee engagement has generally been a catalyst in the search for benefit enhancements where HR budgets for this are minimal or non-existent. Offering employees greater choice can be a great motivator as benefits are targeted at individual employee needs.”

Katherine Blackler
editors@plansponsoreurope.com