How Employee Benefits Are Evolving

Probably the most negative thing to have happened in benefits in the last 35 years is the increasing political focus on tax expenditures, says Larry Zimpleman, chairman of The Principal Financial Group and former chairman of the Employee Benefit Research Institute (EBRI), in the report. Simply put, the government sees tax-advantaged health and retirement benefits as causing “foregone” revenue. Those in the retirement industry have examined some of the potential impact of proposed tax reforms (see “How Tax Reform Could Affect Retirement Plans”).

The report expands on discussions at EBRI’s 73rd Policy Forum, where industry experts and leaders spoke with an audience of employers, regulators, policymakers and employee benefit providers. Broadly, the forum examined how employee benefits have changed dramatically in the past 30 years and are certain to continue to evolve.

The report findings include:

• Since 1975, the year after the Employee Retirement Income Security Act (ERISA) was enacted, total coverage and active participation of the employment-based benefits system has grown significantly, but that the mix has changed dramatically;
• A “massive change” has been taking place over the last 30 years or so in terms of the types of health benefits offered by employers;
• Nursing home and home health care costs are “the most important risk in terms of looking at families that seem to have enough money and end up running short of money in retirement”;
• ”Short termism” dominates the thinking of many employers today, out of necessity;
• Employers want cost control, and voluntary platforms and defined contribution-type programs better allow them to control costs;
• The prolonged recession masked a “profound transformation of the economy, namely the sourcing of jobs from human beings to robots, software programs and algorithms;
• Women are in the workforce now in almost equal numbers to men, and dual earner couples have become the norm; and
• For Millennials, it is not simply workplace benefits that are increasing in importance, but those that provide advice, counseling and recommendations.

The full report is published in the July 2014 EBRI Issue Brief under “Employee Benefits: Today, Tomorrow, and Yesterday,” which can found at http://www.ebri.org.

The Employee Benefit Research Institute is a nonpartisan, nonprofit research institute that focuses on health, savings, retirement, and economic security issues.