Survey finds workplace benefits becoming more important to attracting talent

eFC logo

All pay and no benefits could make John and Jane unhappy employees.

That's the finding of the 2012 Workplace Benefits Report, an annual study of the increasingly significant role financial benefit plans play in employers’ talent management strategies and in the overall financial wellness of their employees.

The survey released today and sponsored by Bank of America/Merrill Lynch widened the scope of its research this year to examine both employer and employee perspectives on the evolution, availability and usefulness of workplace benefits – from 401(k) plans and health savings accounts (HSA) to financial advice and education.

Key findings include:

  • Financial benefits are more important to new hires today than five years ago.
  • Employer concern for employees’ long-term financial security drives benefit decisions.
  • Workers are largely on their own when it comes to transitioning into retirement.
  • Demand for personalized financial advice in the workplace is on the rise.

“Our country’s retirement system is facing a great deal of scrutiny,” said Kevin Crain, head of Institutional Retirement and Benefit Services for Bank of America Merrill Lynch. “Corporate benefit leaders and the retirement services industry must work together to continuously improve and protect the health and vibrancy of this system and of the financial lives of the employees participating in it.”

Financial benefits play a key role in employers’ talent management strategies

The study found that nine out of 10 employers believe that financial benefits are equally or more important to potential hires today than five years ago – with half believing such benefits to be more important than ever. Confirming this, nearly 80 percent of employees view these benefits as a key factor when considering and accepting a new position.

Companies of all sizes also recognize the need to offer competitive financial benefits to retain talented people and stem employee turnover costs (84 percent), from losses in productivity and sales to the high cost of recruitment and training. Encouragingly, the survey found most employers today (81 percent) make financial benefit plans available to employees as part of their company’s core values.

“Benefits should be viewed as one of the most important investments a company makes to optimize employee performance, provide opportunities for them to succeed financially and gain sustainable competitive advantage,” added Crain. “A company culture known for making investments in their employees’ financial wellness, in addition to their professional growth, will attract top talent and foster a more productive and loyal workforce, more deeply invested in the company’s success.”

Helping employees achieve long-term financial security

Ninety-one percent of employees surveyed view their 401(k) plan as one of the most critical savings vehicles on their path to a financially secure retirement. Considering this, nearly half (46 percent) of employers expressed concern over the possibility of a policy change that could reduce retirement savings tax incentives for employees participating in these plans.

According to last year’s study, coming out of the recession, the majority of employers felt an increased sense of responsibility for the financial future of their employees. This was true again this year, with our 2012 study finding concern for employee financial wellness to be the number one reason employers offer financial benefit plans (91 percent).

For most employees, achieving financial wellness is increasingly tied to addressing the rising cost of health care and preparing for retirement income needs, as well as balancing competing financial demands throughout their lifetime. Although employers have made strides in recent years to help put employees in a better position to achieve financial wellness, this study reveals a need for greater focus on retirement readiness and future health care expenses.

Nearly 70 percent of employers feel some sense of responsibility for helping employees secure the assets needed to sustain them later in life. However, workers nearing or in late stages of their career often find themselves on their own when it comes to transitioning into retirement. For example, just 39 percent of employers offer their retiring employees guidance on what to do with their 401(k) assets, while only 20 percent help educate employees on such issues as preparing for future health care costs or understanding when to take Social Security as they approach traditional retirement age.

This may be in part the reason why less than half (42 percent) of employees surveyed feel they are on track to financially support their desired lifestyle in retirement, and another 22 percent have no idea whether they’re on track to do so or not. This lack of confidence may be one reason why 73 percent of all employees surveyed see themselves working into their 70s.

When asked about the desire for a guaranteed source of income during retirement, 82 percent of employees would be willing to give up 5 percent or more of their salary if it meant having reliable income to help them live comfortably during their later years; 42 percent would be willing to give up 10 percent or more of their salary.

“There is an opportunity today for employers to differentiate themselves by filling a major gap in helping employees, particularly older workers, prepare for and transition into retirement,” said Steve Ulian, head of Institutional Relationship Management for Bank of America/Merrill Lynch. “To keep up with employee expectations, we see employers moving toward more flexible benefit programs that offer an opportunity to deliver greater value and more effectively address the longer term financial security of their employees.”

Maximizing health and wealth benefits

When asked what would encourage them to contribute more into their 401(k) account, employees cited an increase in company match (89 percent), more affordable health care benefits (73 percent), greater access to education and advice about saving and investing in the plan (53 percent) and a higher maximum contribution limit (46 percent).

Among employees surveyed, 84 percent cited that their employer currently matches some level of 401(k) plan contributions. The study also found that, last year, one-third (33 percent) of employers reinstated or raised their company match, whereas just 8 percent eliminated or lowered their match – another indication perhaps that economic conditions are improving.

Demand for personalized advice is on the rise

The study has previously shown that the majority (79 percent) of employers anticipate greater demand among employees for saving and investment advice surrounding their benefit plans and broader financial lives. In light of this, it was not surprising to find in this year’s study that 56 percent of companies now offer access to professional financial advice in the workplace.

Among employees without access to professional advice, half would like their employer to offer it. Among all employees surveyed, 43 percent indicate that the availability of financial education and advice services at work increases their loyalty to their company. Areas of their financial life in which employees are most seeking advice include investing in their 401(k) plan (45 percent), preparing for retirement (44 percent), budgeting for current (40 percent) and future (33 percent) health care expenses and maximizing their company stock and equity plans (42 percent).

[polldaddy poll=6304674]

Popular job sectors

Loading...

Search jobs

Search articles

Close
Loading...
Loading...