Employees Rely on Benefits for Financial Preparedness

Nearly two in three workers (63%) strongly believe that employers have a responsibility to offer insurance and retirement benefits, Guardian Life Insurance Company found in its third annual Guardian Workplace Study. In stark contrast, only 16% of employers believe they are responsible for providing benefits. Nonetheless, employers acknowledge that workplace benefits can help employees and their families achieve financial security.

Guardian’s Benefits Value Index, which measures employees’ perceived value of their workplace benefits on a scale of one to 10, rose to 7.1, on par with 2013 and up from 6.8 in 2012. Thirty-four percent of employees are extremely satisfied with their workplace benefits package. On the other hand, only 18% of employers believe their employees are extremely satisfied with their benefits.

Forty-two percent of employees get most or almost all of their insurance products through the workplace, and 68% rely on their benefits for at least half of their financial preparedness. However, many workers do not take advantage of their workplace benefits due to ineffective communication or education. Employers should focus more effort on explaining benefits to their employees, Guardian says.

“Our Workplace Benefits Study reveals how benefits provide a strong financial foundation for many Americans, but many aren’t taking full advantage of what their employers offer,” says Ray Marra, senior vice president, group products at Guardian. “It’s not only important to offer benefits, but to help employees make informed and educated decisions that fit their particular needs. Providing more personalized, easy-to-access professional guidance and decision-support tools will help employees achieve financial security.”

Total compensation statements appear to help, Guardian says. Workers who receive such a statement place a greater value on their benefits and consider their company’s benefits communications effective. Eighty-seven percent feel more confident in their benefit decisions. Nearly three-quarters say that seeing information about the monetary worth of their benefits helps them to understand and value them more. However, only one-third of employers equip their employees with a total compensation statement.

Likewise, Guardian notes, research by the Society for Human Resource Management has found that communicating the value of employee benefits effectively could make a real difference to the bottom line. The use of total compensation statements, benefits workshops, employee meetings and self-service benefits technologies can enhance employees’ understanding of the value of the benefits offered by the organization, leading to better talent retention and other benefits. 

NEXT: Employers’ top benefits goals

Controlling costs is cited by employers as the top goals when it comes to managing their benefits packages. On a scale of one to 10 in importance, employers rated controlling benefits-related costs at 8.8. 

This was followed closely by providing employees with benefits that are affordable (8.5), and reducing the cost of benefits administration (8.1). Other top goals include increasing employee satisfaction with the value of their overall benefits package (8.1) and improving the health and wellness of the workforce (7.9).

Asked about other elements of their benefits strategies, employers highlighted an interest in plan design changes that control benefits costs (6.8), using fewer carriers to reduce costs or improve efficiency (6.0), implementing consumer-driven health plans (6.0) and expanding use of wellness programs (5.9).

As to their philosophy towards benefits, 36% of employers say they are focused on costs, 24% say they are focused on employees, and the remaining 40% say they focused on both.

Guardian’s findings are based on a survey of 1,001 employee benefits decision-makers and 1,706 employees age 22 or older, conducted in the fall of 2014. Guardian’s full Workplace Benefits Study can be downloaded here.