Financial benefits are more important to new hires than they were five years ago, according to Bank of America Merrill Lynch’s 2012 Workplace Benefits Report.
The report, which looks at the role financial benefits play in employers’ ability to attract and keep talent and employees’ ability to save for their future, also found that employers are concerned about their employees’ long-term financial security and that concern drives their benefit decisions.
Nine out of 10 employers surveyed said they believe 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. Eighty percent of employees also view these benefits as a key factor when considering and accepting a new job.
The survey found that 81 percent of employers do offer financial benefit plans to their employees.
“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,” said Kevin Crain, head of Institutional Retirement and Benefit Services for Bank of America Merrill Lynch. “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.”
When selecting financial benefit plans and designing wellness programs, employers place the greatest importance on a plan’s usefulness to employees (88 percent), the quality of service their employees will receive (86 percent), and a plan’s cost (80 percent). The flexibility of the plan to support a demographically diverse workforce is also an important consideration (72 percent).
Ninety-one percent of employees surveyed said their 401(k) plan is a critical piece of their retirement savings and 46 percent of employers said they were concerned about proposed policy changes that would affect the retirement tax incentives for employees participating in these plans.
The study found that although employers have done a lot to help employees’ financial wellness, there is a need for greater focus on retirement readiness and future health care expenses.
Only 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.
Only 42 percent of those surveyed felt they were on track financially to retire comfortably. Another 22 percent had no idea whether they were on track or not. Nearly three-quarters of employees surveyed said they would probably end up working into their 70s.
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.
Because of the demand for financial advice, more than half (56 percent) of employers surveyed for this study said they now offer access to professional financial advice in the workplace.
Fifty-five percent of employers communication with employees about financial topics only once a year or less, which could be the reason 48 percent of employees say they are not very satisfied with their workplace benefits, the study found.
“The challenge for employers is to communicate, in the clearest, most targeted and compelling ways, the advantages that their benefits offer and how to engage with these plans to achieve the best possible outcomes,” said Crain. “HR leaders who embrace communications and effectively leverage their financial benefit plans within broader talent management strategies, can gain a more loyal and empowered workforce, and competitive advantage in the global marketplace.”
Boston Research Group interviewed a national sample of 1,000 employers through a phone survey and 1,000 employees through an Internet survey from January 2012 through March 2012 on behalf of Bank of America Merrill Lynch.