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A Decade of Employee-Benefit Change

A recent study on employee-benefits trends finds some interesting trends since it first began annually analyzing the space 10 years ago. There are more worries about retirement savings, of course, but the study also shows a disconnect between employers and employees on the desirability of various insurance coverage.

Monday, April 23, 2012
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About 10 years ago, Generation Y wasn't terribly concerned about planning for their retirement.

In fact, in 2003, only one-third of employees ages 21-30 were very concerned about running out of money in retirement, according to New York-based MetLife's 10th Annual Study of Employee Benefits Trends: Seeing Opportunity in Shifting Tides. (PDF)

Today -- with their outlook shaped by the recession -- that number has risen to more than one-half (52 percent).

Gen Y isn't the only demographic cohort that has been affected.

Back then, many baby boomers were gleefully planning to retire before age 65, and organizations were fearful that their retirements would leave the working world with a crippling exodus of institutional knowledge and wisdom.

But, as we all know now, the "Boomer Exodus" was largely a bust -- or, has been, at least, delayed. Many boomers today seem resigned to the idea of working well beyond the age of 65, largely as a result of the recession and its deleterious effects on their retirement savings.

"Ten years ago, employees expected benefits, but were far less engaged in their true value," the study notes. "Today, new economic realities are driving employees to more fully appreciate the coverages that their employers provide -- even if they have to pay more of the costs themselves. Today, workplace benefits are an indispensable ingredient in how the working American family achieves short- and long-term financial security.

"Indeed," the study says, "it's unlikely that workplace benefits have ever been as desirable or important as they are in the current era."

To wit, about half (49 percent) of all employees surveyed said the state of the economy has led them to count on their employers' benefits programs to help them be financially stable through their post-employment years, according to the study.

That figures jumps up to 55 percent for Generation X workers and 66 percent for Generation Y, according to the study.

Ron Leopold, an Atlanta-based vice president and national medical director at MetLife, says the study highlights what he calls a "premature appreciation" of employee benefits by younger workers.

"Younger workers are more reliant on and value -- to a greater degree -- employee benefits more than older workers," he says, "and they also value them more than we've ever seen in the history of the study."

Speaking to those generational differences, Leopold notes that, while 31 percent of older workers agreed that benefits were an important part of the reason they came to work for their employer, the number jumps to 56 percent for Generation Y.

"In putting it together," he says, "you start to get a picture that, while younger workers have more flight risk, the magnetic hold of employee benefits is also stronger with younger generations."

He adds that the younger generation of workers also has "a much more robust" attraction to employee-paid and flexible, personalized benefits than previous generations, in part because they've been conditioned that way.

"When they came into the workforce, they were already paying co-pays," he says. "And they value the ability to make informed choices in order to get exactly the things they want or need.

"Cookie-cutter [plan design] is out," he says, "and we're barreling toward personalization."

Popular, he says, are voluntary and employee-paid solutions -- such as supplemental health insurance -- which, he says, "are fast becoming a much greater player on the benefits scene."

Max Caldwell, managing director of New York-based Towers Watson's data, surveys and technology line of business, says the MetLife study aligns with his firm's research.

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"This just reinforces the idea that there is this deepening insecurity about retirement security," he says.

Caldwell says that a recent global workforce study conducted by Towers Watson asked respondents two questions around their retirements: "Do you really understand what you need to do to prepare for it?" and "To what degree do you feel equipped to do it?"

"There was a huge gap between those two responses," he says. "[The respondents] felt really unprepared."

There's still this strong insecurity about the economy, he says, "and I think employers need to continue to provide good education to folks. ... Employees need a lot more education about what they're going to need and what they need to be doing" in order to get to a comfortable retirement.

Organizations must also do a better job of communicating the value of what they're providing to employees in terms of benefits, he says.

"From an attraction/retention standpoint, it helps," Caldwell says, "and people may not realize the value of what they have and it's important to underscore that."

But Jim Edholm, president of BBI Benefits Inc., based in North Andover, Mass., agrees with the MetLife study's finding that employers are believe their workers highly value health insurance and have less of an interest in non-medical benefits, such as life, dental, disability and vision coverage, to help satisfy and retain workers -- which is not exactly the case, according to the MetLife study results.

"In a sense, that's not a surprising finding and is certainly excusable," he says. "Employers pay the overwhelming portion of the health cost, and health costs are the overwhelmingly largest share of the benefits expenditure. So, it makes sense that employers should assume that employees see things the same way they do. 

"But, in fact, employees are individuals and they have a lot of worries -- fixing their kids' teeth, losing their ability to earn a living, cancer, accidents and a plethora of other woes." 

The real question, he says, should be: "How can the attitudes of employers be changed?" 

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