| Test Your Human Resources Knowledge | ||
|
| Labor Law Journal Submissions | ||
|
| Labor Arbitrators' Awards and Biographies | ||
5500 Preparer's Manual for 2012 Plan Years
The premier resource in the field of Form 5500 preparation, 5500 Preparer's Manual will help you handle the required annual Form 5500 filings for both pension benefits and welfare benefit plans.
From Spencer's Benefits Reports: Benefit plan sponsors continue to view employee benefits as “strategically important,” and their top objective over the next five years continues to be to manage benefits costs, according to Prudential’s recently released Study of Employee Benefits: 2007 and Beyond. The study, conducted by the Center for Strategy Research for Prudential in April and May, presents the responses of 1,400 benefits decision-makers from firms with at least 50 full-time benefits-eligible employees.
The great majority of employee respondents (84%) said that benefits are “highly important” in their changing or staying with their current employer, especially among women and employees older than age 30.
Plan sponsors for the most part recognized the “strategic” importance to the company of employee benefits: 51% of benefits decision-makers acknowledged this, and 43% of them said that offering “very competitive” benefits could be a “significant advantage” and aid the company with employee recruitment and retention.
Benefit plan sponsors’ top expense reduction strategies included asking employees to pay more for their current benefits (cost shifting) and moving more financial responsibility to employees through changed plan designs, including high-deductible health plans (HDHPs), health savings accounts (HSAs), and 401(k) plans.
According to Prudential, the percentage of plan sponsors rating cost shifting as “highly important” will more than double in the next five years (from 19% in 2007 to 45% in 2012). The percentage of plan sponsors rating migrating to benefit designs with more employee financial responsibility as “highly important” also will more than double (from 21% in 2007 to 48% in 2012).
Most likely to cite shifting to employees cost and financial responsibility as top cost-containment strategies were large private firms with at least 10,000 employees and midsize public administration and education firms.
Another cost-containment strategy involves criteria for selecting benefits providers—approximately half (51%) of respondents would consider as their top criteria the provider’s cost-effectiveness, while 46% of respondents would opt for the lowest-priced provider. Provider selection criteria also include the provider’s financial stability and service quality with claims, call center, and account management. In anticipation of 2012, the quality of online tools experienced the greatest increase in importance, by 22% for plan sponsors and by 27% of participants, followed by effective benefits communications and education, by one-fifth both for sponsor and participant respondents.
More employers cited improved benefits communications and education as one of their top benefits objectives—in 2007, 34% considered it highly important and 26% advocated targeting specific segments of the employee population. For 2012, 54% of sponsors are expected to consider such a strategy “highly important.” However, only 35% of employees and 21% of sponsors currently rate their communications and education strategy as “highly effective.”
The survey revealed a need for more education and communications on disability insurance and the potential need for such insurance. There is a disconnect between the number of employers offering short term disability (more than 66%) and the number of workers who are not aware of the benefit offering (21%). Few employers help employees determine their disability insurance needs: 12% do so, and another 22% expect to do so in 2012. To increase employee awareness of disability, group life, and long term care insurance, Prudential recommends that plan sponsors separate benefits enrollment for those benefits from annual enrollment for health care benefits.
Plan sponsors also are consolidating benefits providers for health and welfare and retirement plans—84% have done so this year and 32% said that they plan to do by 2012. Nearly two-thirds (65%) of benefit plan sponsors used the same insurer for group life and disability benefits, with 62% affirming that this strategy had improved ease of administration and 51% that it had reduced costs for those benefits.
Among the top cost-containment strategies that benefit plan sponsors were utilizing or are planning to utilize within the next five years are the following approaches:
Although slightly more than one-fifth (22%) of sponsor respondents cite a “strong linkage” between their company’s benefits strategy and its corporate goals/business strategy, another 41% expect to have such linkage by 2012. Larger firms (those with at least 5,000 employees) were most likely to have established such linkage.
“Due to cutbacks in health care coverage, elimination of traditional pension plans, and increased cost sharing, only about half of all U.S. workers (53%) place ‘high value’ on their current benefits package,” the Prudential report noted. In addition, only about half of employees and employers (52% and 55%, respectively) strongly agree that their companies offer a “wide range of benefits,” and fewer still agree that their firms pay for most or all of the cost of their benefits (39% of employees and 32% of employers). “Real and perceived benefits cutbacks are eroding employee satisfaction with their benefits and negatively impacting employee satisfaction and loyalty,” the report concluded.
The employee respondents in the Prudential study exhibited these characteristics: Age groups—only 13% were younger than age 30, while 57% were in the age 40 through 59 group; Region—the greatest proportion of employee respondents (36%) were in the South; Income—19% had household income of less than than $50,000, 59% have income in excess of $75,000 of which 37% have income in excess of $100,000; Education—45% had a college degree or were technical school graduates and 34% had postgraduate degrees.
For more information, visit http://www.prudential.com.
For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.
Visit our News Library to read more news stories.
©2005-2024 CCH Incorporated or its affiliates
