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CCH® BENEFITS — 04/28/09

Employers Underestimate How Much Employees Value Benefits

from Spencer’s Benefits Reports: Employee and employer perceptions of how benefits contribute to loyalty differ significantly, according to the 7th annual Study of Employee Benefits Trends conducted by MetLife. As shown below, employees place a higher value on benefits than employers perceive that they do:     

* Other insurance includes life, dental, disability, vision, etc.

The study found that, faced with today’s economy, employees are placing a greater value on their benefits packages than they did in the past. In addition to the importance of health and retirement benefits, the overall importance of other benefits (such as life, dental, and disability) in contributing to company loyalty increased among employees from 51% in 2007 to 69% in November 2008.

The top employer objectives for offering employee benefits has “remained remarkably stable since 2005”: employee retention, followed by controlling costs, increasing productivity, increasing job satisfaction, and attracting employees. The study notes that the “majority of employers continue to see the value in offering employee benefits” and that only 15% of employers are considering reducing their 401(k) match, 12% are considering reducing coverage levels of benefits offered, and only 10% are considering shifting additional costs to employees.

MetLife recommends that employers consider more factors than just participation rates when evaluating certain benefits. In some cases, employees might not have enough information to understand the importance of certain benefits. “For example, the most important financial concern of employees is sudden loss of income, and while 71% of employers offer disability insurance, only 57% of employees own it through the workplace, most likely because they don’t understand how this benefit addresses their financial income replacement need,” the study noted.

The survey found that 51% of employees are interested in getting advice about investing their retirement funds, but only 19% of employers defined retirement planning as an important strategy. Despite their interest, many employees are unaware that their employers offer retirement planning seminars. Retirement planning seminars are offered at 37% of the companies surveyed, but only 35% of their employees were aware of such seminars. The lack of awareness was most evident at larger companies: 63% of the companies with 10,000 or more employees offered retirement planning seminars, but only 45% of their employees were aware of that feature.

“Employees are ahead of employers on seeing the need for their retirement plans to provide guaranteed income,” the study said. While 50% of employees are interested in employers providing ways to convert their retirement plan lump sum distributions into some kind of annuity, fewer than 10% of employers already offer annuity products. A majority of the remaining companies (82%) are open to consideration of annuities or were not sure what actions their company would take, while only 9% would not consider offering an annuity.

The MetLife study was conducted in two parts: 1,524 benefits decision-makers and 1,349 employees were interviewed in August 2008. In November 2008, the study interviewed 569 employers and 627 employees. For more information, visit http://www.whymetlife.com/trends/downloads/MetLife_EBTS09.pdf.

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