Impending healthcare reform and a stagnant economy are impacting employees’ views of benefits and retirement.
By Jeff Miller
A weakened but wiser workforce faces the future these days, after a tough period of recession and backsliding retirement funds. As the economy gathers speed, it’s obvious that there’s still a long way to go. However, workers are still committed to saving money despite shaky confidence in the market and the adequacy of their retirement funds.
We know this—as we do each year—because we’ve measured employee attitudes toward employer-sponsored retirement, health, and benefits programs through our Mercer Workplace Survey™, a national cross-section of active 401(k) participants. This year we conducted online interviews with 1,656 participants, and found a mixed bag of results, although there is reason to be encouraged, thanks to the robust technologies, high standard of service, and strong communication strategies that employers rely on from the benefits outsourcing community.
The plan participants we surveyed are also at least more optimistic about the future of the United States economy compared to 2011. Nearly three-quarters (73 percent) indicated they expect either “weak” or “robust” economic growth in the next 12 months, while the number anticipating a recession has declined sharply, from 40 percent in 2011 to 27 percent in 2012.
And yet, despite this improved outlook for the current economy, plan participants are not as confident when it comes to their personal circumstances. More than one-third (36 percent) of participants are still concerned about losing their jobs and a record 44 percent have considered delaying retirement. And in terms of retirement planning, only 53 percent of Mercer’s survey respondents believe they will be ready to retire financially.
Historically, economic trends are an indicator of personal confidence. However, over the past two years we have seen something of a divergence of trends. In 2011, participants had a very negative economic outlook but felt more confident in their own ability to save for a successful retirement. In 2012, while participants felt the economy was starting to improve, they didn’t see the immediate impact this improvement would have on their own financial outlook for retirement. Such trends shift and can’t always be explained.
A more optimistic finding of the survey is that only 10 percent of participants report that paying down credit card debt is their biggest financial worry, the lowest level in this category since 2004— and down from 15 percent in 2011. Participants also indicated they are committed to saving more in their 401(k) plans. Anticipated contributions have risen to an average of $7,995, up 7 percent from 2011.
Those are hopeful figures because they reveal a workforce that has taken greater control of its finances, and has gotten the message that the need to save for retirement is vital and calls for discipline and increased savings levels. There’s no overstating the role played by employers and their benefits outsourcing providers in communicating that message strongly, providing the means and motivation for greater savings. Moving through 2013 and beyond, it’s important that we continue to help employees build for their futures.
If anything, these figures underscore the need for employers and their benefits outsourcing partners to emphasize the importance of benefits as part of employees’ total rewards packages. That’s because the 2012 survey shows that while benefits overall remain an important aspect of employee engagement (90 percent agree that getting health benefits is as important as getting a salary), there is some year-over-year deterioration in the perceived value of these benefits. For example, in 2010, 72 percent of surveyed employees agreed that their benefits make them feel appreciated by their company; in 2011, 75 percent of them felt that way; but in 2012, the percentage fell to 68 percent, which is where it stood as far back as 2006. With so much recent focus on the complexities of healthcare reform, regulatory changes, and fee disclosures, it’s not surprising that employees find their benefits to be a little, if not a lot, more complicated—and thus feel a little less positive about them than before.
As the outsourcing industry makes it easier for employers and employees understand the value of benefits programs, and as employees embrace the practical reality of facing the future, it’s clear from our Mercer Workplace Survey that they have fewer illusions about the challenges they face. But they’re sticking with the program—and it’s our job to help them do exactly that.
Jeff Miller is the president and group executive of Mercer’s outsourcing business, located in Norwood, Mass.