UK - Employers are turning to flexible benefit plans to manage their spiralling pension costs and help retain final salary schemes, Mercer Human Resource Consulting claims.
The actuarial and benefits consultant claims flexible benefits provide a “flexible framework” for employers to share costs with their employees and offer a useful approach to managing executive pensions under the new lifetime pension limit.
European partner Peter Bowers said: “In the current environment of rising pension costs, there are strong arguments for considering the flex approach.
“A major benefit is that flex plans allow companies to share their increasing pension costs more easily with employees. They can then continue sponsoring their final salary schemes on a more affordable basis.”
Flex plans offer employees a choice in the type and level of benefits offered, up to a maximum value – and usually incorporate a range of benefits including pension, holidays, healthcare and other insured benefits.
Within these plans, some companies provide a core level of pension which staff can choose to enhance each year in exchange for other benefits in their reward package, or through a deduction from payroll.
At the same time, if the cost of the pension increases, companies have the ability to pass part of this increase on to employees each year through the flex plan.
Employees can then either meet this extra cost or accept a lower level of benefit.
Bowers said: “Costs are shared with employees in a way that gives them more control over the level and type of benefit they receive.”
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