Data & Research April 26, 2017

Financial Wellness Benefits Key to Employee Retention

A new survey by CFO Research and Prudential finds most financial executives believe a financially secure workforce has a major positive effect on their bottom line.
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Most financial executives believe that employee benefits packages focusing on financial wellness are key drivers of success for their companies, according to a recent survey by CFO research and Prudential.

The study found that more than half of executives or 82% believe their company will benefit from having a financially secure workforce. Only 5% said they don’t believe so, and 13% said they were not sure. Most executives view financial wellness as a key component of corporate performance, as well as an effective human resource-management strategy.

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“It is encouraging to see that employers are seeing the value in helping employees focus on financial wellness,” says Jim Gemus, senior vice president, distribution and product management, Prudential Group Insurance. “In particular, employers seem ready to look at ways to not only measure the financial wellness of their employees, but also to benchmark it against other companies in their industry. This survey demonstrates that the vast majority of employers recognize that improving the financial wellness of their workforce yields significant benefits for their companies and employees alike.”

More than six in ten respondents (63%) say that employee satisfaction with benefits is important for their company’s success, and 65% believe that employee benefits are critical to attracting and retaining employees. Even if the deductibility of employer-sponsored benefits were to be removed, several respondents (29%) said their companies would either continue to offer the same package with the same subsidies or increase employee compensation to counterbalance reduced corporate subsidies (28%).

Most (78%) also said that employers should assist employees in achieving financial wellness during their working years. Only 8% disagreed and 14% were not sure. Even more (84%) say that it is important to ensure that their companies’ employees are educated on key tenets of financial wellness.

Finance executives consider higher employee satisfaction (59%) and increased retention (53%) as the most important benefits coming out of a focus on financial wellness.

Seventy-percent agree that it is important for their companies to measure employees’ financial wellness. About the same number (71%) agree that benchmarking their employees’ financial wellness versus other companies is an added source of value.

These findings are from the sixth annual survey of the benefits landscape conducted by CFO Research and Prudential. This year’s results are based on survey of responses of 180 finance executives, most of whom (78%) work at large U.S. companies with more than $1 billion in annual revenues.

More information on the survey can be found at Prudential.com.

Data & Research April 26, 2017

Business Owners Confused About State Plans for Private Workers

Small-business employees in Connecticut will soon be able to access retirement planning services administered by the state, and their employers have a variety of opinions about what this mean. 
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LIMRA Secure Retirement Institute polled small-business owners in Connecticut about their opinions regarding the forthcoming retirement planning program that will be administered by the state and offered to private-sector workers.

While work is already underway behind the scenes, the “Connecticut Retirement Security Plan” will begin widespread public operation in 2018. In the most basic terms the program will require all Connecticut businesses of five or more employees with no defined benefit or defined contribution savings arrangement to participate in the retirement security program. Employee participation will be voluntary, taking a negative-election approach such that employees will initially be auto-enrolled and will have the ability to opt out. Employers will not be required to match contributions.

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With the program finally coming into fruition after years of debate and development, the LIMRA Secure Retirement Institute decided to conduct four focus groups made up of small-business owners in Connecticut “to better understand their feelings about the state’s new retirement plan and what they understand about it.”

As LIMRA explains, “the results of these focus groups also provide insight into how small-business owners across the nation may react to the mandates of possible upcoming retirement legislation.”

Unsurprisingly, LIMRA finds reactions were “mixed” among the small-business owners regarding the new program.

“There was also some confusion about the state-run retirement plan and how it would affect their businesses,” LIMRA warns. “In fact, some small-business owners did not realize a state plan actually existed. Others were confused about certain features, especially the required income option. Many simply did not believe their employees would value a state-run plan or utilize it.”

Naturally, LIMRA finds general “mistrust of government entities administering a state-run plan” fuels some negative responses. Other negative responses are pinned to “unsatisfactory experiences with state-based health exchanges.”

“In other cases, participants conflate the state managing the new state-run retirement plan with the already established state teachers’ and employees’ pension programs,” LIMRA warns. “Both have faced well-publicized funding and liability challenges.”

LIMRA reports that employers with positive reviews of the state plan “appreciate that the state is addressing a potential retirement predicament and providing employers with a new benefits they were unable to offer before. They are also pleased the state is taking responsibility for the plan and that employees can take their accounts with them if they were to change employers.”

The full LIMRA Trends analysis is available here. 

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