According to a research report released by LIMRA in early 2017, about 75 percent of workers in the U.S. want a customized workplace benefits plan. Since prior studies conducted by LIMRA showed that employers’ top priorities included keeping and attracting top talent, this is a significant consideration for all companies. An attractive benefits package was rated as one of the top reasons for people accepting employment offers or seeking employment in the first place.
The strategy of designing an attractive flexible benefits plan is often called a benefits wallet. With this structure, employees are allotted a certain amount of money each month to put toward the benefits of their choosing. While the feature gives employees more control, it can also negatively affect retirement savings choices.
According to another recent study from LIMRA, about 50 percent of workers were happy with their current benefits. Non-married workers were less satisfied than married workers. Employees who worked with financial advisers were more likely to be happy with their benefits. According to a survey from Aflac, 40 percent of respondents were likely to stay with their employer if they were happy with their benefits.
LIMRA found that employees with a higher income were less satisfied with benefits, and low-income workers were more likely to be satisfied despite having more limited options. Over 50 percent of respondents said that workplace benefits were a major contributor to their financial security.
Retirement savings, health insurance and vacation were the top three priorities cited among survey participants. This means that employers should pay close attention to related valuable benefits such as disability insurance and life insurance. Younger workers may not realize the importance of these coverage options or how likely they are to need them. According to LIMRA, more than 35 percent of American households depend only on employer-sponsored life insurance.
In LIMRA’s research report, age also influenced preferences of benefits. Millennial employees preferred paid parental leave and education benefits since most of them held high student loan debt balances. Generation X employees preferred wellness programs and financial planning options. Baby boomers preferred packages with disability coverage.
Researchers agree that competition for the best workers will drive companies to make their benefits options more competitive in the near future. Although a benefits wallet structure may seem like the ideal solution, it should be approached cautiously because of the possible negative impact on retirement savings. When employers choose this structure, they should emphasize the importance of retirement planning and offer some attractive options.
Alan Wang is the President of UBF and serves as the lead consultant. He has delivered the UBF solution set throughout the world and is highly regarded for his areas of expertise. You can follow him on Twitter @UBFconsulting.