I am an employer who wishes to update the benefits package for my staff. I want to ensure I am competitive and utilise technology wherever possible. What can an IFA do to help me?
Employers who offer attractive benefits will retain staff and recruit more easily. In the recent Origen employee benefits survey, two-thirds of employees said they would be more likely to stay with an employer who offered good benefits.
Pensions are at the core of a good package although many employees still do not bother to join employer-sponsored schemes. Without advice or compulsion, employees may not take the time to understand the scheme offered.
Advances in medical science and increased longevity, mean that the cost of protection has fallen. All employers should commission an IFA to review their employee benefits to ensure the correct products are in place while maximising cost efficiencies.
The taxation of employee benefits is changing continually. Government incentives include the recently introduced home computing scheme which offers tax benefits in return for employers providing cost-neutral home computing for employee, in this case by reducing employees' gross salary over a three-year period while the employer pays reduced NI. Salary sacrifice still attracts NI savings and corporation tax deductions. Your accountant and an IFA can ensure you maximising tax-efficiency.
The full range of employee benefits can be split into financial non-tangible products such as income protection, death-in-service cover, private medical insurance, critical-illness cover and dental cover, alongside more tangible benefits such as discounts off consumer goods, extra holidays, cars, bonuses, childcare, bicycles, computers, flexible hours and alternative health treatment. The communication of the value of benefits needs to be made clear. Extra holidays and discounts score more favourably with employees than, say, PMI where the cost has risen by over 50 per cent in the last five years. The costs and risks attaching to this choice need to be understood by employees.
Most IFAs who help set up employee benefits schemes have a process in place that can be broken down as follows:
Employer specifies benefits they wish to provide.
IFA presents cost basis for services with client.
Analysis of existing pension arrangements and benefits.
Obtain initial costs from providers and determine options.
Prior to the presentation of recommendations to the employer, the IFA will supply an employer's application and administration guide covering the options available and establishing how the scheme can be administered most effectively.
A copy of the existing payroll needs to be printed out and signed by a director for money-laundering purposes.
Announcement packs given to all eligible members.
Presentation to employees.
At the presentation, everyone is given an invitation to join as well as an announcement letter giving the scheme options. The IFA's terms of business letter will be included and a short questionnaire to establish basic information.
Process in place to deal with enquiries and options.
One-to-one advice where agreed on issues such as retirement planning and divorce.
By compartmentalising the process as set out above, the IFA can provide their costs on a menu basis. This will be predominately in the form of fees. However, commission can become an option, more often to offset against time spent.
The IFA will carry out a beauty parade on your behalf to ensure each provider matches your benchmark criteria.
Technology-based admin solutions allow the most effective transactional efficiency in employee benefits. For protection products, ongoing admin is minimal but pension admin can be daunting. The IFA will process new business, find out who the providers' points of contact are, understand the providers' systems and how you can interact with them, develop complete familiarity of their products, ensure commonality between the admin and set-up processes and arrange services and products to match your needs.
An increasing number of IFAs have systems that can administer the scheme internally. Many can feed into the providers' back-office systems so the process is minimal and providers' documents such as illustrations and valuations can be accessed instantly.
In future, providers will be able to provide worksite access through the web for employees, who can check their benefits and use the flexibility offered by schemes as their lifestyle changes. This will further simplify the process of providing a comprehensive, flexible scheme.