A Bank of America Merrill Lynch Workplace Benefits Report, which included a sampling of responses from 650 HR leaders, benefit plan leaders, and corporate executives from across the nation, found employers are seeing more potential employees inquiring about retirement benefits and more existing employees taking a hands-on approach to retirement plans. Today, 94% of employers believe retaining older employers for their skills and talents is important.
Due to life expectancies lengthening and Baby Boomers needing to work longer, there's a growing aging population of U.S. workers. Employers must approach this with an age-friendly workplace and benefits capable of meeting the unique needs of workers across the age spectrum. In order to stay competitive, many businesses have tasked their HR leaders with making adaptations to operational and physical components of their businesses so that the intellectual and skill capital of older workers can be harnessed longer.
A number of benefits were offered by age-friendly employers to retain aging workers and attract younger workers:
- Flexible, customizable work schedules, at 50%.
- Education on topics like health care and retirement income, at 33%.
- Continuing education and development opportunities, at 32%.
- Remote work opportunity, at 22%.
- Extended benefits to older employees, at 21%.
Retirement Benefits. The study showed 98% of employers felt that attracting younger employees was an important element in broadening the skills and talents in their workforce. When asked what factors could help attract new talent and create employee loyalty, retirement benefits (at 58% for attracting and 59% for loyalty) were second only to health care benefits. In light of the recent recession, many employers have evolved to better meet the needs of a workforce diverse in age. There also seems to be a greater sense of responsibility toward the financial future of workers now. In fact, the study found that 59% of employers felt a greater responsibility in helping their employees meet financial goals following the recent recession. More than 50% of these employers felt the responsibility included providing employees with access to financial education/advice and financial benefit plans.
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Employers were specifically asked why they offered financial benefit plans. The responses included: Employee retention, at 76%; attracting new talent and the financial well-being of employees, at 68% each; core values, at 64%; and competitiveness and employee productivity, at 39% each.
401(k) Plans. Post-recession, almost half of the employers said they've noticed more potential employees inquiring about financial benefits and shifts in how existing employees address retirement benefits. In comparison to before the economic downturn, 58% of employers noticed workers nearing retirement taking a more hands-on approach to financial benefit plans, 36% found earlier enrollment in financial benefit plans among younger workers, 26% noticed workers were contributing enough money to get their full company match earlier, and 19% noted earlier maxing out contributions.
With more employers abandoning traditional pension plans and Social Security's alleged solvency problems, many employees are increasingly turning to defined contribution plans like 401(k)s. The study showed 75% of employers expect either increased enrollment in 401(k) plans or contribution increases, 79% anticipate an increased demand for access to 401(k) plans and investment advice, and 80% expect aging employees to work longer to extend benefits.
Education/Advice. Employers are offering employees an array of financial services and advisory portals to assist in retirement prep; understand investments and stock options; afford health care; and monitor financial goals, spending, and budgeting. The study found an array of tools were offered to help employees manage personal finances. Employers cited providing access to the following:
- Literature and research on investment decisions- 45%.
- A financial advisor- 39%.
- Online tools to manage banking and investing- 38%.
- Age-relevant financial seminars- 34%.
Fifty-nine percent noted that only half of their workforce took full advantage of the financial advice and services offered. Fifty-four percent felt this was due to employees feeling services/advice was irrelevant to them, 54% thought their employees felt the resources too complicated, 46% thought employees didn't have time, and 23% thought their employees might not be aware of availability.
A diverse workforce makes it vital to provide financial education and advice that's aimed toward an employee's specific life stage and needs. Personalized, easy to use financial benefit plans can spur utilization, distinguish employers from competitors, and boost employee loyalty - especially when accompanied by frequent employee communication.
Interestingly, 31% of employers felt they could better communicate the value of financial benefits to employees. Only 14% reported communicating the value of their financial benefits plans more than twice a year, and 61% of all the employers were only providing basic information during communications.
Enhancement. Employers that planned to enhance their various financial benefit plans within the next two years said they were doing so to keep up with employee changing needs, at 57%; retain talent, at 45%; and to avoid hindering themselves when attracting talent, at 43%. The enhancements were likely to include:
- Defined contribution plans- 78%.
- Flexible savings accounts- 74%.
- HSAs- 72%.
- Non-qualified deferred compensation plans- 58%.
- Defined benefit plans- 47%.
- Stock equity plans- 39%.
Vendors are offering a higher level of access to professional advice in managing and achieving financial goals and are expanding programs aimed at older employees because they realize employers need to evolve to accommodate a diverse workforce and maximize the value of what's offered to stay competitive.