Banks accused of inflexibility in employee benefits

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But banks are less likely than other companies to offer this choice, which is known as flexible benefits.

Instead of a fixed menu of pensions and healthcare, for example, flexible benefits allow an á la carte choice. Older workers often opt to pay more into a pension, while graduate trainees might choose to have a PC instead.

Supporters of such schemes say they are popular with staff and help companies attract the right people.

Many financial services firms are unimpressed. &quotWe rely on cash, which is the most flexible benefit of all&quot, says a spokesperson at one US investment bank.

Hewitt Associates is aware of such scepticism. &quotIn the financial sector, the majority of compensation is paid in cash and there has traditionally been less emphasis on the benefits side of things&quot, says Hewitt's Chris Noon.

He says that flexible benefits are particularly valuable following a merger. Individuals in the merged company can either choose benefits that suit a nostalgia for what they received before, or they can select a new arrangement suitable for a new organisation.

Cathy O'Bright of Hewitt says: &quotTrying to bring together unwieldy and inflexible benefits systems can be a real distraction. Flexible plans can make this process considerably simpler, less contentious and less time-consuming.&quot

European banks appear most receptive to the benefits of flexibility. Both UBS Warburg and ABN Amro have so-called 'flex-plans' in place.

UBS Warburg's plan followed the 1998 merger between UBS and SBC. &quotIt is a good way of bringing people together on a common benefits platform that also fits a wide variety of lifestyles and needs&quot, says Tracey Palmer at UBS Warburg.

Other bank mergers have not led to flexible benefits however. Neither JP Morgan and Chase Manhattan, nor CSFB and DLJ, introduced flex plans to smooth their union.

Noon at Hewitt Associates says flexible benefits might however become more popular with financial services companies, because the cost of some benefits is rising so fast. Health insurance is going up in double figures annually.

Giving staff an amount of cash to be turned into benefits instead would allow banks to contain costs more easily.

In many companies that offer flexible benefits, holidays, medical cover and dental insurance are the most popular items on the list.

Noon says that in financial services companies, concierge facilities and car parking spaces are also highly prized. Some banks are also considering introducing sabbaticals.

&quotBut there is less flexibility about holiday entitlement in the City, so there are very few flex plans that include holidays,&quot he says.

UBS Warburg's plan does, however. It offers staff the chance to buy up to 5 days additional holiday, as well as items such as pension top-ups, disability and medical insurance, car parking, PC leasing, and a tax return service.