Both Zurich and Friends Life are also planning to launch corporate savings platforms before the end of 2011. Zurich’s Money4Life and Friends Life’s My Money will provide similar access to a corporate pension, a cash ISA, an equity ISA and a general investment account, coupled with educational tools and support available online and over the telephone. Both companies also have plans to ensure their platforms will integrate with existing flexible benefits systems.
Dave Lowe, head of Corporate Wealth Propositions at Zurich, says: “As a general and life insurer, we will also be looking into other products and making sure they fit together.”
The providers of corporate savings schemes suggest that employees can benefit financially, whether from earning higher savings rates than they might be offered as an individual, or by paying lower annual management charges when investing in funds.
Allowing employees to divert money directly from payroll is not only convenient, but can also save on tax. For employees who make pension payments via salary sacrifice, Jenkins explains: “The money comes out of gross salary, so you save both tax and national insurance contributions.
“Even where the benefit is not approved for salary sacrifice, such as vouchers for Marks & Spencer or Sainsbury’s, then employees can still benefit where Standard Life purchases large chunks of retail vouchers and gets a discount.”
The providers of corporate savings platforms also emphasise how they can help employees to understand the value of any benefits package on offer. Honess says: “Behind all these benefits there is a good business reason: they act as a recruitment and retention tool. We are seeing a surge of interest this year, possibly because companies cannot pay big pay rises, but they can increase their employees’ understanding of benefits.”
Warren Page, Director of Client Services at employee benefits and private client advisers Origen, which is part of the AEGON group, agrees. Page says: “There’s a significant trend for employers wanting to make sure that benefits are communicated and they get a return on their investment. If you have a good suite of benefits, which are well-communicated, you are less likely to lose someone for an extra couple of thousand pounds a year in salary with a weak benefit structure. Similarly, when looking to recruit, the benefits package is a common question.”
Insurer Aviva introduced Total Reward Statements last year (2010) specifically to help employees understand the value of their corporate benefits. Total Reward Statements are offered alongside group personal pensions but give staff an online, personal statement of their broader benefits package, including salary, bonus, pension, medical insurance, health screening, life and critical illness insurance, car allowance and holiday.
The technology behind the Total Reward Statements is provided by employee benefits software company Staffcare. Phil Hollingdale, Staffcare Chief Executive Officer, says: “Many companies recognise that they could do a better job of communicating benefits to employees, and old methods of communication such as printed handbooks and face-to-face meetings do not meet the demands of today’s internet-savvy employees who are used to information on demand.”