A Bank of America Merrill Lynch Workplace Benefits Report, based on responses from 650 HR leaders, benefit plan leaders, and corporate executives nationwide, found employers are seeing more potential employees inquire about retirement benefits and more existing employees taking a hands-on approach to retirement plans.
Today, 94% of employers believe retaining older employees for their skills and talents is important.
Due to lengthening life expectancies and Baby Boomers working longer, the U.S. workforce is aging. Employers must adopt age-friendly workplace practices and benefits that meet the needs of workers across the age spectrum.
To stay competitive, many businesses have asked HR leaders to adapt operational and physical components so that the intellectual and skill capital of older workers can be retained longer.
Benefits offered
- Flexible, customizable work schedules — 50%.
- Education on topics like health care and retirement income — 33%.
- Continuing education and development opportunities — 32%.
- Remote work opportunity — 22%.
- Extended benefits to older employees — 21%.
Retirement Benefits. The study showed 98% of employers felt that attracting younger employees was important to broaden skills and talents in their workforce.
When asked what factors could help attract new talent and create employee loyalty, retirement benefits (58% for attracting and 59% for loyalty) were second only to health care benefits.
In light of the recent recession, many employers have adjusted to better meet the needs of a multigenerational workforce and report a greater sense of responsibility toward employees' financial futures.
Fifty-nine percent of employers felt more responsible for helping employees meet financial goals after the recession, and more than half expected that responsibility to include providing access to financial education, advice, and financial benefit plans.
For related resources on younger employees and retirement, see Young Workers as Homebuyers and Retirement Planning.
Employers were specifically asked why they offered financial benefit plans. Responses included employee retention (76%); attracting new talent and the financial well-being of employees (68% each); core values (64%); and competitiveness and employee productivity (39% each).
401(k) Plans. Post-recession, nearly half of employers reported more potential employees inquiring about financial benefits and shifts in how existing employees address retirement planning.
Compared with before the downturn, 58% of employers noticed workers nearing retirement taking a more hands-on approach, 36% saw earlier enrollment among younger workers, 26% observed earlier contributions to get the full company match, and 19% noted earlier maxing out of contributions.
With a move away from traditional pension plans and concerns about retirement income adequacy, many employees are increasingly relying on defined contribution plans such as 401(k)s.
The study found 75% of employers expect increased enrollment or contribution increases in 401(k) plans, 79% anticipate greater 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 a range of financial services and advisory portals to help employees prepare for retirement, understand investments and stock options, afford health care, and monitor budgets and financial goals.
Education and advice tools
- Literature and research on investment decisions — 45%.
- Access to a financial advisor — 39%.
- Online tools to manage banking and investing — 38%.
- Age-relevant financial seminars — 34%.
Fifty-nine percent of employers reported that only half of their workforce took full advantage of the financial advice and services offered.
Employers cited reasons such as employees feeling the services were irrelevant (54%), too complicated (54%), lacking time (46%), or unaware of availability (23%).
A diverse workforce makes it important to provide financial education tailored to an employee's life stage and needs; personalized, easy-to-use benefit plans with frequent communication can increase utilization and loyalty.
Interestingly, 31% of employers felt they could communicate the value of financial benefits better, and only 14% communicated value more than twice a year, with 61% providing only basic information in communications.
Enhancement. Employers planning to enhance financial benefit plans within the next two years cited keeping up with changing employee needs (57%), retaining talent (45%), and avoiding a disadvantage in attracting talent (43%).
Planned enhancements
- Defined contribution plans — 78%.
- Flexible savings accounts — 74%.
- Health savings accounts (HSAs) — 72%.
- Non-qualified deferred compensation plans — 58%.
- Defined benefit plans — 47%.
- Stock equity plans — 39%.
Vendors are expanding access to professional advice and programs aimed at older employees because employers need to evolve to accommodate a diverse workforce and maximize the value of benefits.
Employers enhancing their plans may also consult resources on Planning for Retirement and Business Continuity to align benefits with broader workforce and business needs.
If an employee or employer wants personalized help reviewing options, talk to an agent.
Frequently Asked Questions
How can employers improve retirement plan participation?
Employers can improve participation by offering personalized education, simplifying enrollment, providing automatic enrollment or matching contributions, and communicating benefits value regularly.
What types of financial education are most effective?
Practical, age-relevant seminars, easy-to-use online tools, and access to advisors tend to drive higher engagement and applicability for employees at different life stages.
How do enhancements like HSAs and flexible savings accounts help employees?
These enhancements give employees more options to save for health and retirement expenses, increase flexibility, and can improve overall financial security.