American workers are increasingly satisfied with their employer-sponsored retirement plans, but less so with their health benefits, a trend employee benefit advisers should heed when working with employers on benefit packages, particularly those geared toward employee attraction and retention.
Two-thirds (67%) of 5,070 full-time employees surveyed by the international benefits firm Towers Watson say they are satisfied with their employer-sponsored retirement plans, including defined benefit and 401(k) plans. Thats a jump of 13 percentage points since 2009, with much of the increase concentrated among younger employees and those with DB plans. The number of employees satisfied with their health care benefits, however, has declined from 69% in 2007 to 59% in 2013. The downward trend is most pronounced among older workers, those in poor health and those enrolled in high-deductible health plans.
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Advisers should also note a growing number of employees surveyed say they are willing to sacrifice pay for more secure and generous retirement benefits, while fewer say they would give up pay for better health benefits.
Given employees widespread concern about retirement security and readiness, this may be the ideal time for employers to reevaluate their employee benefits and strategies for the future, says David Speier, an adviser at Towers Watson. Addressing employees preferences for retirement and health care benefits could help employers provide a more engaging work environment, and at the same time help workers in their efforts to prepare for a comfortable and financially secure retirement.
While more workers are happy with their retirement benefits, they are increasingly concerned that their retirement income will come up short when they exit the workforce, adds Kevin Wagner, a senior adviser at Towers Watson. Most employees view their employer plan as their primary retirement savings vehicle, perhaps explaining why they are willing to give up a portion of their paycheck for more generous and secure retirement benefits.
On the other hand, while employees rely on and value their health care benefits, They are clearly not happy about their health care costs, says Speier. At a time when costs are consuming a significant share of their household budget, its no surprise that employees are less willing to trade some pay for either more generous health benefits or more predictable costs.
Rising medical costs have prompted employers to shift a larger share of health care costs to their workers, largely believed to be the root of employee dissatisfaction with current health care benefits found in the firms survey.
Meanwhile in separate Aon Hewitt survey, 2014 Trends in Global Employee Engagement, found employees perceptions of their workplace benefits has actually increased 3% in the United States since 2012. While that shows a mild improvement in employee benefit appreciation, its lower than the 5% increase in benefit appreciation seen globally.
Roselyn Feinsod, a senior partner at Aon Hewitt Retirement, attributes the increase in U.S. employee appreciation found in the global benefit firms report to increased engagement.
For health care plans, employers are focused on enhancing wellness and providing choices and tools to greater engage consumers. These have been moving over the last five years, but I think it is getting to a level that employees are starting to notice the impact of these changes, she says.
For retirement plans, she adds, employees are more likely to appreciate their benefits because employers have taken a range of actions to improve plans.
Sponsors have been relaxing eligibility, broadening Roth and providing better tools for financial planning including managed accounts, online tools and one-on-one counseling, she says.
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