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A flexible benefits scheme will include a range of health, wealth and lifestyle benefits provided through a combination of Core, Flex and Voluntary options.
It is crucial to understand an organisation’s business objectives, HR strategies, benefits goals as well as the demographics of the employees before deciding the actual benefits and services to be included. Below are some products and services references but the list of potential products and services is much wider:
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- Core benefits usually include a combination of retirement plans (e.g. MPF), group medical, group life insurance etc. Employers may extend some of these benefits to dependents too.
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- Flex schemes provide trading options for group benefits (such as medical, life insurance) can be offered, as well as additional options such as critical illnesses, health check ups, other wealth accumulation options (i.e. mutual funds), and even holiday trading. These options are usually offered once a year.
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- Voluntary benefits are individual products and services that employees may purchase at any time during the scheme year with their own money. These may be products such as individual term life insurance, motor insurance, gym membership and discount retail and leisure offers.
Similar types of benefits and services may be included under Flex and Voluntary. The benefit choices and options are all definable by the employer based on their employee benefits objectives and financial budget.
Not necessarily. Many employers actually took this approach to changing their benefits model from defined benefits (DB) to defined contribution (DC). This means that instead of guaranteeing your employees a certain level of benefits, your benefits budget is pegged at a defined level and made available for employees to tailor their own benefits within that budget. The flexible benefits approach has proven to be very effective in bringing together holistic benefit solutions that provide real alternatives to employees while supporting the employers to manage the increasing burden of benefits funding and management.
Traditionally the costs have been broken down into:
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- Feasibility consulting
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- Design consulting (benefits, communications etc)
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- Implementation
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- Administration/ongoing running costs
Costs for each of these are dependent upon the supplier and can vary widely from one to another. Feasibility and design consulting services have typically been provided by the major global HR consultancies exclusively until recently. empower offers an end-to-end service for a single per employee per annum fee.
Experience from the UK has shown that the expected increase in risk profiles due to anti-selection has not materialised to any significant level for key group benefits such as life cover. Initially when the market developed in the UK, some life insurers estimated a 6% increment in the premium cost but gradually reduced this to almost 0% after a number of years of running schemes. There will still be risks in flex that some insurers are unwilling to take on without a premium increase. Most of these however can be mitigated through effective benefits design, scheme rules, underwriting and pricing mechanisms.
It is therefore possible to control the cost implications on the employer through the selection of providers who understand flex and by careful design of the rules and pricing associated with the benefit trading options.
empower offers cost-competitive solutions. We will generally only charge a Per Employee Per Annum (PEPA) fee over an agreed contract term. This fee covers all of the services above and therefore is highly dependent on the complexity and sophistication of the scheme. empower's aim is to achieve cost efficiencies for all its clients and therefore aims to benchmark its fees to the amount that would be saved with a 2% improvement in an employer's retention rate.
empower offers an end-to-end employee benefits solution. We will take care of your needs all the way from benefits design to implementation and on-going scheme administration. Our services include the following:
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- Scoping – support you to structure a benefits scheme that is specific to your organisation. The scoping report will include a financial analysis, our proposal for your revitalised benefits plan, communication strategies and a high level project plan for implementation.
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- Feasibility study – ensure the plan design is viable and supported by all the providers of products and services. We will also work with you to build a financial business case to support your internal decision process. A more detailed project plan is included.
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- Agreement – drafting and entering into formal contract with you after reaching the agreement for a go ahead.
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- Detailed scheme design – this will include defining and agreeing the detailed scheme specifications, communication plans, systems interfaces etc. Proper sign-offs will take place at this stage to confirm understanding and agreement before implementation.
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- Implementation – empower's project management team will coordinate the whole project. The customer will continue to be integrally involved in all major decisions and user acceptance testing. We will ensure that your implementation load burden is kept to a minimum. The implementation work will range from systems configuration, testing and data loading to communications and benefits elections.
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- Operations – this will include the on-going administration of the scheme. empower provides you and your employees with multi-channel communication support, meaning online, on-site and through our call centre. empower will conduct annual scheme reviews to ensure that your scheme stays closely aligned to the changing needs of your organisation and your employees.
The answer is yes. empower can work with your existing broker and insurance provider. We also have a panel of preferred partners in place who have committed to developing flexible benefits. This means that they have products and services that are designed specifically for a flex scheme, including benefits features to risk management techniques.
We see strong demand of flexible benefits in Hong Kong and other markets where competition for talent is intense. The lack of choice and range of services provided by suppliers added to cost barriers (such as feasibility studies) have suppressed the appetite of many organisations to seriously consider it in the past. It is now a popular agenda of many corporations in Hong Kong and also around the region.
Many HR managers view flexible benefits as a concept that is not new but have gone on to say that cost, complexity and administration have been their major concerns. They believe that if these concerns are minimised or removed, flexible benefits will become an effective HR tool for their organisations.
Our aim is to reduce the HR administration burden wherever possible. We do this by offering a fully outsourced administration service and a full team of resources to lead the planning and implement phases of any project. The commitment required from most HR teams is to set the objectives and then work with us to ensure what is being delivered meets your requirements as we execute the project on your behalf.