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I want to provide my employees with a competitive benefits’ package. What can IFA do to help me and how can I make sure there is minimal disruption to my business?

Any employer who gives their employees control over their remuneration package by providing flexible benefits to match their lifestyles will help them become an employer of choice with the ability to recruit and retain the best people.

All organisations employing five or more staff have to offer access to a stakeholder pension scheme. Then the decision needs to taken which type of pension scheme and how much to contribute, if anything at all.

With advances in medical science and the increased longevity of the population the cost of protection has reduced. All employers should ask an IFA to review their employee benefits to ensure “best of breed” in product selection while maximising cost efficiencies.

Without the encouragement and provision of specific advice, many employees do not fully understand the benefits offered to them and do not bother to join employer-sponsored schemes.

The benefitsThe full range of employee benefit plans can be split into financial non-tangible products such as income protection, death in service, private medical insurance, critical-illness cover and dental cover.

The more tangible benefits are discounts off consumer goods, extra holidays, concierge services, cars or, more commonly, cash for cars, bonuses, child care, bicycles, computers, flexible hours, alternative health treatment.

Due to this demarcation in benefits, the communication of the value of benefits needs to be made clear. Extra holidays and discounts score more favourably with employees than, say, private medical insurance, where the cost has increased by over 50 per cent in the last five years.

What needs to happen to implement a employee benefits’ package?

Most IFAs who help set up and implement an employee benefits’ scheme have a process, which can be broken down as follows:

  • Employer specifies benefits they want to provide – budget or level of benefits.

    l IFA presents cost basis for services with client – fees or commission (if feasible).
  • Analysis of existing pension arrangements and employee benefits.
  • Obtain initial costs from providers and determine options for employerl Before the presentation of recommendations to the employer the IFA will supply an employer’s application and administration guide, to cover the options available and establish how the scheme and contributions can be most effectively administered.
  • 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 will be given an invitation to join as well as an announcement letter giving the scheme options (charges, optional extras). The IFA’s terms of business letter will be included with a short questionnaire to establish basic information.
  • The IFA will have a process to deal with enquiries and employee options.
  • There will be ongoing monthly administration, particularly for joiners and leaver.
  • One-to-one advice covering agreed issues such as retirement planning and divorce.

By compartmentalising the process as set out above IFAs can provide costs for services on a menu basis. This will be predominantly on a fee basis but commission can become an option more often to offset against time spent.

IFAs will carry out a “beauty parade” process on your behalf to ensure each provider can be justified against your preagreed benchmark criteria – particularly within the admin processes adopted.

Administration

Technology-based administration solutions allow the most effectively administered transactional efficiency in employee benefits. For protection products, the ongoing admin is minimal but pension administration can be daunting.

The IFA will process new business, find out who the main provider point(s) of contact are, understand the providers’ systems and how the IFA and you can interact with this, develop complete familiarity of their products, ensure commonality between the admin and setup processes and arrange services and products to match your needs.

An increasing number of IFAs have systems that can administer the scheme internally, that is, bulk feeds, able to read information and download from payroll. 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 the future, product providers will eventually need to allow worksite access for the employees. This means that new staff will be able to access information on the benefits’ package available through the web and the existing members can check on their benefits. Web access will simplify the process and will entail less work for the employer.

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