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Research reveals limited appetite for salary sacrifice

Date: 10 August 2010   |   Author:

Julie Jenner is ACFO chairman

Just 17.1% of fleet managers are actively researching salary sacrifice schemes, while nearly half are not showing the slightest interest in the employee benefit, according to research conducted by fleet operator's trade association ACFO.

Despite growing popularity among leasing firms looking to embrace the latest scheme, ACFO's research found 21.7% of responses from its 800 members said they had "no interest" in the schemes, with another 24.2% having "never looked" at the option.

"This supports in general what I'm seeing in the industry," ACFO chairman Julie Jenner told BusinessCar. "We already don't see the same noise as we were in the last 12 months."

Jenner continued: "I wonder if people want to spend time doing it at the moment, when we're just out of a recession. Do employees want to commit the money to buy a brand new car?"

But Jenner said salary sacrifice can work in the right situation, when elements such as minimum wage, staff turnover, maternity leave, part-time workers and staff turnover don't cause problems. But even in firms that have set up salary sacrifice schemes, attractive due to the increasing availability of appealing low-CO2 cars, there are still question marks about whether staff take-up will match expectations.

"Most providers will, I'm sure, acknowledge that salary sacrifice can be an excellent product under specific fleet-operating circumstances, but it cannot be considered as having universal relevance," said Jenner. She also said the next year will be key to whether salary sacrifice is a flash in the pan or a long-term addition to those staff members eligible for fleet cars. "In 12 months time the result will be different - it will either have died a death due to lack of take-up or more and more people will do it as they see it work for others."

Firms including Venson, Zenith Provecta, Leaseplan and Alphabet have all been pushing their salary sacrifice products this year, with the hope that schemes will create additional volume for the corporate market.

The companies blazing a trail in adopting schemes for their employees tend to be huge blue-chip organisations, and Business Car Finance boss David Rawlings feels the schemes are here to stay. However, he warned that if firms implementing salary sacrifice aren't thinking the implications through, they could get their fingers burnt: "If you haven't got the right levels of communication and control, things like excess mileage and fair wear and tear are waiting there to bite you."

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