Delivering more of what employees want through benefit allowances
Increasingly, employers are looking to give employees greater flexibility and freedom through benefits. However, adding hundreds of benefits to a scheme to try and achieve flexibility and freedom for an entire workforce is not only difficult and admin heavy, it's never going to meet the myriad of different needs and interests that employees have.
Flex funds and allowances solve the challenges that employers are facing by delivering greater relevance and flexibility within their benefits provision, and they put choice firmly back in the hands of the employee. Individuals can spend a set amount of money on benefits that add value to them on a personal level. That could be a middle-aged employee in India buying maternity cover – to ensure they can take paid maternity leave - or adding a child or parent to their health insurance plan; or it could be a young employee in Singapore buying additional annual leave. It’s all about letting people choose the benefits that are relevant to them and their lifestyle.
Benefits allowances are another way to deliver the ultimate flexibility within benefits provision – ease and simplicity for employers, who can offer benefits in areas which currently sit outside of their provision; and flexibility and speed for employees who aren’t restricted by the limitations of a specific set of providers. Wellbeing allowances are becoming more popular in regions where benefits options are limited and they enable employees to spend on anything wellbeing-related, within the parameters set by the organisation. For instance, an employee can use their allowance to join a gym, join a tennis club, for a yoga class or even buy a pair of running shoes. Organisations are still supporting employees’ physical and mental wellbeing, but they’re able to do so in a far more relevant way.
Crucially, employers can set rules and limits around how employees are spending this money – for instance, they can prescribe what proportion of an employee’s allowance goes on health, or fitness, or learning, or whatever categories they specify. These parameters can also ensure that, despite the flexibility and freedom that allowances create, benefits are still aligned with the company’s values and benefits strategy. The major driver for benefits provisions now is ‘how do we become as competitive as we can in the labour market?’, and that is true across all countries and industries. It’s not enough to just be competitive on pay; employees are increasingly looking at the whole package and really delving in to what benefits are on offer, and their value to them.
“The challenge for global employers is how to stay competitive by offering valuable, relevant benefits in multiple markets. It’s hugely time consuming to source benefits such as gym membership or health assessments locally. Therefore, employers are using allowances to give employees the choice and flexibility they want, and to deliver a more consistent approach to benefits across their international workforce.
Benefit allowances are already prevalent in many European countries and across Asia, and they are rapidly becoming more popular in the UK, where they tend to complement, rather than replace, traditional benefits schemes. Employees still want the structure and security of a platform which offers key financial protections and insurances – allowances can provide an additional level of flexibility above that.
We’ve seen a major uplift over the last 12 months in the number of employers looking to use our platform to deliver allowances. And this trend is likely to accelerate in 2024.”
Paul Andrews Global Benefits Consulting Director, Benefex
