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LONDON -- Flexible benefit packages are taking off in the United Kingdom as companies recognize that traditional benefits no longer meet the needs of today's employees, benefit consultants say.
In the past few months, consulting firm Towers Perrin has begun to receive far more inquiries from U.K. companies wanting to put together flexible benefit options for employees, noted Tammy Mattson, a principal with Towers Perrin in London.
Alan Mackay, director of flexible benefits at Sedgwick Noble Lowndes Ltd. in Croydon, England, a unit of Sedgwick Group P.L.C., said: "U.K. employers started talking about flexible benefits about 10 years ago, but the first few to implement them did so about four or five years ago. The numbers who are now introducing flexible benefits are increasing enormously."
Companies are looking at introducing flexible benefits as a means of recruiting and retaining staff, he noted. "It would seem that even the most established and conservative of companies are now looking at flexing their benefits package, and if this trend continues, it will become the norm rather than the exception," he predicted.
"I have been in the U.K. about a year and a half, and in the last three to five months the interest in broad-based flexible benefit programs has increased substantially," Ms. Mattson observed.
Most companies have traditional benefit packages in place that can be several decades old and do not reflect current employee needs, she said.
Flexible benefit programs taken up by U.K. companies differ from packages offered by U.S. employers in several ways, according to Ms. Mattson. Most notably, health care benefits are much more important in the United States, as the United Kingdom still has an extensive National Health Service, and U.S. flexible benefit programs do not incorporate pension provisions, she said.
Although "the administration of flexible benefits has in the past been an inhibiting factor, Sedgwick Noble Lowndes and other consultants have addressed that problem," making it much easier for companies to make benefits flexible, Mr. Mackay said.
Last month, for example, a flex benefit and pension model was unveiled by The Employers Forum on Age, an employer-backed group that promotes the role of older workers. The model, called FlexPlan, was developed by Towers Perrin. The EFA's members include many of the United Kingdom's largest employers.
"A FlexPlan operates by offering the individual employee a high degree of flexibility around the three main components that make up their reward -- base pay, benefits allowance and pensions contribution. Instead of being given a standard company package, within guidelines, an employee can develop a tailor-made package relevant to their current stage of life and needs," according to a statement issued by the EFA.
Choices are up to each employer but include, for example, boosting a pension, funds for child-care needs or cash instead of benefits.
"Not only is the FlexPlan a pensions and benefits package that truly reflects the changes in the modern workplace, it is exactly what employers need to encourage a mixed-age work force," said Howard Davies, chairman of the EFA and chairman of the Financial Services Authority.
The FSA, the U.K. financial services regulator, is one of the first organizations to implement the Towers Perrin FlexPlan model.
The authority has 1,300 employees but is expected to grow as the government plans to merge other existing regulators, such as those covering insurance and personal investment, into the FSA.
Other U.K. companies introducing their own flexible benefit packages include U.K. chocolate manufacturer Cadbury Ltd., a subsidiary of Cadbury Schweppes P.L.C.
Bournville, Birmingham-based Cadbury launched a pilot program for management in April. The voluntary package, designed to complement existing benefits, offers several other options for employees, said Neil Smart, the subsidiary's personnel manager responsible for reward programs.
The additional benefits offered include travel insurance, dental insurance, critical illness insurance, child-care vouchers, membership in a health club, discount membership in a local cricket club, and services to assist employees in filling out government tax forms. So far, some 10% of the company's 600 managers have taken up the additional benefits, which is in line with initial expectations, said Mr. Smart.
The company now is examining whether to extend the program to the remaining members of its 5,000-person work force, as well as adding other benefits or flexible working arrangements, said Mr. Smart.
Mr. Smart predicts British employers increasingly will offer flexible benefits.
"The way forward will be to make benefits more flexible to meet the needs of the employees and workplace," he said.