Are your employee benefits cost effective?

20 ñ 30% of an employerís total outgoings can be spent on employee benefits. According to Alan Fergusson, Director of Employee Benefits Division of Kudos Independent Financial Services, employers should undertake regular reviews of their employee benefits provision in order to ensure that it is both cost effective for the employer and provides the best value to the employees.

Alan Fergusson, Director of Employee Benefits Division of Kudos comments, ìEmployers need to consider whether or not the employee benefits schemes that they have in place are the most effective solution for their business. Due diligence can be carried out to determine whether or not the existing schemes are delivering value for money and also to provide an accurate assessment as to whether the company has the appropriate cover in place to ensure that all employees are on risk.î

According to Alan carrying out such an evaluation of employee benefits has advantages for both the employer and the employee. ìUndertaking a review of the employee benefits is normally associated with identifying potential liabilities. Employers can also use this as an opportunity to review the employee benefits that they offer to their employees. Some businesses may have in place very traditional employee benefits schemes which are very inflexible and therefore do not provide value for money to the employer or best value to the employee.î

Carrying out due diligence on an employee benefits scheme can identify a need to update the benefits which are offered to employees. ìIntroducing a flexible benefits system which incorporates a total reward statement ensures that employees are aware of the total value of their remuneration package. The total reward statement details each component and shows its monetary value.î

Recent research showed that 82% of companies agree that a good benefits package attracts and retains high quality staff. ìIn todayís competitive employment market it is important for employers to be sure that they are offering the best package possible so that they can both attract and retain personnel. Giving employees the opportunity to flex benefits allows them to really own their employment package as they can tailor it, within reason, to suit their individual circumstances.î

Employers sometimes think, wrongly, that altering an existing employee benefits scheme to introduce a varied and flexible range of benefits will be a costly exercise. Alan says, ìWhilst there will undoubtedly be costs associated with reviewing and revamping the employee benefits scheme employers could stand to recoup these in a variety of ways.

ìDepending on how the employer wants to introduce such a scheme, it may be possible to fund part or all of the costs through National Insurance savings generated. They may even find that some of the more expensive benefits are less popular and savings could be created this way.î

Attraction and retention of quality staff remains at the top of many HR agendas, and every opportunity has to be looked at when considering how to plan for this.

Kudos specialises in due diligence and is one of the largest group pension providers in Scotland. In recent years, Kudos has developed its employee benefits division including offering flexible benefits. Kudos also specialise in investment and trust services. More about Kudos can be found at www.kifs.co.uk or by calling the Aberdeen office on 01224 652100.