sharing benefits

By:Anupriya Verma10 PG (J) 06

Sharing Benefits“Flex can address needs of both employers and employees”

FLEXIBLE BENEFITS / CAFETERIA PLANS

Introduced by MNCs

Options provided by companies around taxable allowances

 Menu of optional benefits

Best fits individual’s needs

Customize their benefit packages

Potential of cost saving to both employers and employees

Compliant with Section 125 of the Internal Revenue Code

Dental Insurance

Vision Care

Group-term Life InsuranceChild Care

Disability Insurance

Optional Benefits

Most popular flexible benefits

Lifestyle Benefits:•Holidays•Mobile phones• Education• Child care• Transport reimbursement• Food vouchers

Medical Benefits:•GP•Maternal•Dental•Optical

Personal Insurance:•Health screening•Spa•Fitness

How Flex Works

Defined-contribution conceptFixed number of flex creditsBased on their salary, marital status, number of dependents, career level, performance and/or tenure Use these credits to “buy” their benefitsCore-plus plans: Medical insurance, legally-required benefits, long- term disability insurance, and retirement benefitsModular plans: Holidays, transport reimbursement, food vouchersDual income families - duplicate medical benefitsEmployers control the allocations of the credits; also the price tag on the benefitsProvides employers with the mechanism to shift some future cost increases to employees (cost-sharing basis)Empowering aspect sets it apart

Flex as a talent retention strategy

Cost-effective ways to maximize the value of benefits programs

 Valuable tool to satisfy employee needs and ultimately assist in retaining talent

Helping the businesses to meet the needs of a diverse staff

Attract and retain talent – driving force in implementing Flex

Advantages of Flex Benefit Schemes

Employees choose benefits to meet their needs, so value these more highly

Employers have a known fixed cost regardless of the benefits chosen

Employees appreciate the true value of their benefits and don't receive unwanted benefits

Employees have a sense of participation and control

Dual career couples avoid duplication of benefits

Employers are seen as responsive and caring

The benefits package aids recruitment and retention

Employers are better placed to demand flexible working practices

Challenges in implementing Flex

•Costs (80%) and administration (79%) - two main obstacles

•Uncertainty over where to find a qualified vendor

•Lack of market data (27%)

• More complicated to administer

•Record and maintain each employee's benefit package

•Must maintain adequate communication 

•Offer the opportunity to re-visit their benefit choices

Main Reasons

Companies Providing Flex

Phillips

ABN AMRO Bank

IBM

Various law firms

ConclusionFlex is neither known or widely practised yet

Only 51 per cent of the respondents were aware of Flex

High attrition rates at BPOs, the administrative complexities outweigh advantages of Flex

Encashable monthly awards and vacation leaves treated as manna

Forty-nine per cent of the respondents were willing to implement Flex within a year

Companies can break-even in a year if Flex is deployed on a co-share basis

Indian labour market has not yet matured enough, No one wants to be first

References

•Business World Issue Dated 10-16 March 2009

•http://www.referenceforbusiness.com/index.html

•http://www.mercer.com/referencecontent.htm?idContent=1318200

•http://www.employeebenefits.co.uk/

•http://www.mercer.com/homepage.htm?siteLanguage=100

THANK YOU