More employers are considering or are implementing “employee choice” benefits packages that provide employees with a fixed amount of funds for benefits and that enable employees to select benefits using these funds or their own funds, according to a new study.
Prudential Financial, Newark, N.J. published this finding in a new survey, “The future of Retirement and Employee Benefits: Finance Executives Share their Perspectives,” which examines strategies employers are pursuing to address the rising costs of benefits programs while providing employees with the best benefits possible. Conducted on behalf of Prudential by CFO Research Services, a unit of CFO Publishing LLC, New York, the study polled 108 senior finances executives.
The survey finds that nearly in one three respondents (29%) expect their companies to adopt employee choice benefits programs within the next two years. This compares with just 15% of respondents who describe their company’s current strategy as employee choice model.
According to the study, 41% of the responding executives indicate that their companies are also at least “somewhat likely” to offer guaranteed lifetime income benefits in the future. In a Prudential 2010 survey, this percentage was less than one-third of respondents (30%).
Most of the executives, the report adds, agree that providing guarantees in the form of downside protection is a way to help employees stay invested in the stock market.
More than half of all respondents (56%) agree that offering more voluntary benefits is a cost-effective way to increase employee satisfaction with benefits. And about half (51%) agree that offering voluntary benefits, such as group life and dental insurance, is the best way to provide employees with access to these types of insurance.
Still larger percentages of the respondents say their companies are likely to expand the range of voluntary benefits offered to employees (69%) and replace some employer-paid benefits with voluntary benefits (71%). Additionally, 35% of executives note their companies are somewhat or very likely to offer voluntary benefits to retirees, in addition to active employees.
Nearly 7 in 10 respondents (69%) believe they will be forced to delay retirement due to inadequate savings, the survey says. To mitigate workforce management issues that can stem from delayed employee retirements, the report adds, 59% of employers are considering strengthening defined contribution plans by enhancing target date funds to provide protection against market volatility.