What to do from our latest thoughts and observations?
- Be aware that in the current climate new living and working adjustments could be impacting your people’s wellbeing. An Employee Assistance Programme (EAP) is a first line of defence that employers offer.
- If you don’t have an EAP then consider setting one up – which can be done cost effectively and rapidly.
- If you have an EAP then promote it. They are often overlooked by employees and in these challenging times they would value being aware of the service available.
At the moment there is limited activity in flexible benefits schemes, with employees maintaining the choices they have made, and employers holding back on any changes to arrangements until the future becomes clearer.
So we are expecting and managing for both the immediate and longer-term in terms of the impact to our clients’ flexible benefits arrangements. Here are some of the things we are experiencing under each.
Immediate impact
- Some employers will have an immediate need to save cost which will have an instant impact on flex. This is most likely to be through changes to benefit design – such as reducing employer pension contributions percentages.
- At the same time, employers who had very recent enrolments (e.g. 1 April live benefits) are looking at ways employees can change the selections they have made. This might include opening an emergency further window to change any selections.
- Employee telephone and email helplines are currently quiet but we expect to see an increase in questions as time goes on. Some employers are beginning to think about pre-empting the questions they will receive. Helpline employees will need to be trained and given the responses to use.
- Employers and employee helplines need to continue to follow legislation and best practice around benefits communication. For example, encouraging employees to opt-out of pensions schemes remains inappropriate.
- A number of benefit providers have quickly responded with changes to benefit design (for example, Gymflex), which needs to be communicated to employees both directly and also in the information displayed on the flex platform.
- A number of employers have implemented freezes on pay increases which will have a knock-on effect with regard to pay-related benefits such as holiday buying, and may require adjustments later in the year.
- Due to a consequence of the Government salary replacement scheme, furloughed employees need to have salary sacrificed benefits (e.g. pension) switched to net deductions to avoid the employer picking up the full cost of the benefit.
- HMRC recognises that COVID-19 is an acceptable Qualifying Life Event (see www.gov.uk)
Future planning
- Some employers are looking at delaying, postponing or even cancelling annual enrolments in 2020.
- Annual enrolments (certainly those in the summer) are likely to be more limited than normal with an automatic roll-over of existing choice identified key benefits such as pensions, medical cover and insured benefits. Employees will be able to opt-out either through an enrolment or as a Qualifying Life Event. This might need to be a manual exercise for furloughed employees.
- Consideration will need to be given to furloughed employees and how they will make selections. Many will not have employer-provided technology but may have their own technology they can use. There are certainly communication implications here.
- The limited ability of employees to travel/take holiday now and in the short- to mid-term needs to be considered, and allowing employees to defer holiday for longer periods (two years, as per the recent Government announcement) will need to be considered as part of the design of the holiday buy/sell benefit. Some employers are planning additional holiday sell windows later in the year but it’s important to recognise that this an additional cash cost to the business at a time when most businesses are feeling at least some pain.
- Pay increase deferrals now could see salary changes implemented at later points in the year. This will have an impact on salary related benefits and employers will need to consider if they implement changes mid-year or simply allow pre-increase deductions to continue.