BenefitsEmployee Engagement

Handicapping Retirement

A survey reveals workers’ views of the market (okay) and their own wallets (not so much).
By Jeff Miller
Since 2003, we’ve conducted the Mercer Workplace Survey to track employee attitudes toward employer-sponsored retirement and health benefits programs. The survey is a crucial tool that influences our Total Benefits Outsourcing (TBO) business model, helping us focus and re-focus our investments, ensuring that our clients get the most from our services, and delivering timely education and value to their employees.

Looking at a national cross-section of active 401(k) participants who are also participating in their employer-sponsored health plan (1,502 of whom were interviewed online between May 27 and June 15 of this year), the 2010 survey reveals any number of trends that, given the economic turmoil of the last two years, are hardly surprising. For most, this is a time of caution bordering on anxiety, punctuated by employment insecurity. Compared to 2008, more workers over 50 are considering delaying retirement. Concern over inadequate retirement savings is also up, and participants’ expectations for the percentages of their working incomes that they expect to have in retirement is down.

And yet, there’s also a surprising new wrinkle. In previous years, the Mercer Workplace Survey has generally found participant attitudes and expectations in harmony with broad economic trends—when workers feel positive about the national economic outlook, they are usually comfortable with their own situation, and vice versa. However, this year—in an unusual disconnect—participants expect the big economic picture to improve even as their own personal outlook deteriorates.

Compared to 2008, dramatically more participants expect profits at their companies to be up (52 percent versus 42 percent in 2008), the stock market to be higher (44 percent versus 30 percent) and home values in their area to be on the mend (up 14 points from 2008, to 37 percent). They also think unemployment has peaked, with fewer expecting unemployment either nationally or regionally to increase in the year ahead.

Indeed, the proportion of participants expecting the economy to grow is up sharply (21 points, to 77 percent), close to the level registered in 2007 before the global recession. To be sure, most participants expect weak rather than robust growth, but employees seem more astute about economics and no longer make an easy correlation between the economy at large and their personal profiles. Experience is a harsh teacher, obviously, and the many workers who have seen their 401(k) balances erode profoundly during the downturn of 2008 are sadder but far wiser in 2010.

For example, older workers (with lower income replacement expectations to begin with) have markedly downgraded retirement income expectations; they are now looking to replace only 62 percent of their working income in retirement, down from 69 percent in 2007. Moreover, their confidence in achieving this replacement ratio is also down, from 37 percent of them confident in 2008 to only 29 percent confident today.

How will older participants cope? Most believe Social Security will provide the largest portion of their retirement income (35 percent) while they are counting on their DC plan to provide only 26 percent. For younger workers, the proportions are reversed (39 percent for DC, with only 20 percent expected to come from Social Security).

All of which points to a heightened responsibility for the outsourcing community. We must ensure that employees face the future with a maximum knowledge of how retirement and benefit choices may affect them and their families, and provide them with the resources they need to make those choices efficiently. This means everything from simple investment options to state-of-the-art service resources—from traditional call center phone access to the burgeoning medium of online chat. In fact, our outsourcing business has seen a significant increase in the number of clients adopting our online chat capabilities: from two pilot clients in 2009, to 11 in the first half of 2010. This has resulted in a 55 percent increase in chat sessions handled by Mercer contact center representatives in the first half of 2010 compared to the first half of 2009.

Obviously, online chat provides another way—besides phone and e-mail—for employees to interact with contact center representatives. It gives retirement and health plan participants the opportunity to seamlessly seek help at the point of decision, while they are logged into their accounts. And it reflects outsourcers’ commitment to offering innovative technological solutions to clients and their clients’ employees. It also combines well with other tools, such as retirement planning calculators and online, interactive learning modules that can engage participants and encourage them to become committed managers of their benefits.

For younger workers, these tools are beacons of a financial future they have reason to be hopeful about, since they have time on their side and have benefitted from more access to financial insight and information than previous generations. And though the survey indicates that anxiety about retirement savings has spiked for them, those anxieties have always weighed especially heavily on workers closest to retirement. The proportion of older workers losing sleep over saving enough for retirement has jumped 11 points (to 29 percent) since 2008.

Then there’s the great unknown of healthcare reform, which has been greeted with skepticism by our survey participants. Even though this is an insured population, only 17 percent expect to be better off from reform, while six in 10 expect to pay higher taxes, and more than four in 10 expect to be worse off overall. Support is higher—although not high—among younger workers and lower among their older colleagues.

These are vital signposts as we refine our commitment to our customers. If anything, the survey suggests employers and outsourcers have performed responsibly, helping to educate employees about economic realities and the increased challenge of retirement. By continuing to deliver unflagging service, we can help employees shape their futures.
Jeff Miller is the president of Mercer’s Outsourcing business, based in Norwood, Mass. He may be reached at

Tags: Benefits, Engaged Workforce, HRO Today Global

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