METLIFE’S EMPLOYEE BENEFITS TRENDS STUDY FINDS EMPLOYEES MOVE FROM “INTENT” TO “ACTION” TO PROTECT FINANCIAL FUTURE
NEW YORK, March 23, 2009
Despite current economic conditions, “employee retention” remains the most important benefits objective for US companies, demonstrating that employers view talent as a source of competitive business advantage in good economic times and bad, according to MetLife’s 7th Annual Employee Benefits Trends Study, released today. However, economic pressures are increasing employers’ emphasis on simultaneously controlling costs and increasing employee productivity – employers’ second and third benefits objectives, respectively.
For workers, financial protection is a growing priority. According to the MetLife study, market volatility has made employees more aware of their personal risk exposure, causing 56% to report that they appreciate their workplace benefits more than ever before. The study also found that 41% of workers overall, and more than half (52%) of those at larger employers (with 2,500 or more employees), strongly consider their workplace benefits to be the foundation of their financial safety net. Nearly half of working Americans (46%) say that because of recent economic events they are taking a greater interest in understanding the employee benefits they receive through the workplace.
Despite Economy, Most Employers Not Cutting Benefits
With a heightened appreciation for their workplace benefits, some employees though are worried that employers may make cut-backs in employee benefits offerings and/or coverage levels. One-third of all workers are concerned that employers will reduce workplace benefits over the next 12 months. However, fewer than 15% of employers expect to make such cuts. This even holds true for smaller employers (those with less than 500 employees), of which only 14% plan to reduce employee benefits offerings in some manner as a result of unfavorable economic conditions. Perhaps this is because 39% of employers (and 50% of those employers with 2,500 or more employees) believe that workplace morale is strongly linked to the quality of employee benefits.
“With employees expressing an increased appreciation of workplace benefits, employers have a great opportunity to maximize the inherent value of their benefits programs for both their people and the bottom line,” said Bill Mullaney, president, MetLife Institutional Business. “It’s great to see that most employers are focused on long-term objectives for continued sustainability and are thoughtfully considering how to react to current economic pressures.”
Employees Taking Action
For employees, the knowledge of sustained benefits programs couldn’t come at a more opportune time. Over the past 12 months – with the financial downturn a significant catalyst – workers have moved from financial “intent” to “action.” Many have heard the alarm bell and have now taken steps to evaluate their personal finances. In fact, six out of ten employees – and 73% of older Baby Boomers – say they have been motivated by the economy to review their retirement income needs. To protect against future financial risks, many have been prompted by the current economy to also take steps to determine their household’s needs for life insurance (44%), disability insurance (38%) and long-term care insurance (35%). For those with children under the age of 18, those percentages climb to 57%, 49%, and 46%, respectively.
Near-Term Optimism, Long-Term Concern
Perhaps because of the steps they are starting to take, many workers feel optimistic about their near-term financial futures. Interestingly, even though 45% of employees now say they live paycheck to paycheck (up from 37% in 2006), about four in ten (43%) believe their own economic situation will improve over the next six months; whereas only 20% believe it will worsen. Generation Y employees, born between 1977 and 1987, are most confident, with 56% expecting their financial situation to improve by mid 2009.
Longer-term, however, employees worry about their ability to afford a comfortable retirement. Slightly more than half (51%) say that they are planning to retire later than they were expecting 12 months earlier.
The most nagging retirement-related concern remains “being able to afford healthcare in retirement,” cited by 65% of employees, followed closely by “outliving retirement money,” cited by 61%, and providing for a spouse’s long-term care needs, also cited by 61%. More than half (51%) of employees are very interested in having their employer provide access to financial planners for help in making retirement decisions, such as investing in a 401(k), up from 38% in 2006.
The need to pay for day-to-day expenses is the number one reason standing in the way of an earlier retirement, with 60% of pre-retirees ages 51-60, and even 43% of those ages 61-69, noting that they depend on their paychecks for routine living expenses. Furthermore, five in ten workers report staying in the workplace either because they rely on their salary to save for retirement (48%) or to maintain access to benefits (47%).
“Last year, we saw that employees were poised for action and looking to the workplace for advice,” notes William Raczko, vice president, MetLife Institutional Business. “Today, employees have begun to take action steps, motivated in a large part by the economy. They are paying more attention to building a financial safety net and how their employer can help. This attitude shift presents a tremendous opportunity for employers to be creative in leveraging the value of their benefits programs as a tool for strengthening loyalty and productivity.”
Growing Loyalty – But Major Perception Gaps Exist
Likely due in part to labor market uncertainties, employees report strong levels of workplace loyalty. About six in ten (59%) workers said they felt strong loyalty toward their employer in November 2008, up from 53% just three months earlier. And, in spite of some employers having to make some difficult personnel decisions, employers feel increased loyalty towards their employees – 57% of employers in November 2008 described themselves as strongly loyal to employees up from 52% in August. However, many employers are mistaken regarding some of the key factors influencing employee loyalty.
Top influencers of employee loyalty:
|Employee Says||Employer Thinks|
|2. Health Benefits||2. Health Benefits|
|3. Retirement Benefits||3. Company Culture|
|4. All Other Insurance Benefits||4. Advancement Opportunities|
The most significant gaps between employer and employee beliefs include:
- Retirement Benefits: 72% of employees said retirement benefits were a significant factor influencing loyalty, compared with 40% of employers.
- All Other Insurance Benefits (Life, Dental, Disability, Vision, Etc.): 69% of employees say these non-health benefits play a strong role in workplace loyalty (a sizeable increase from 51% in 2007); yet only 41% of employers seem to realize this.
“For employees the focus is clear – the desire for financial security. Employers who recognize the significance that workplace benefits are playing to fulfill that desire can more effectively design benefits plans that may have a greater return on investment for all stakeholders. With limited resources available, insights into where opportunities exist to maximize results are key,” adds Mullaney.
The 7th Annual MetLife Study of Employee Benefits Trends is available at whymetlife.com/trends2009 along with a wealth of other related benefits resources.
The 7th Annual MetLife Study of Employee Benefits Trends surveyed employers and employees at two different points in time, August 2008 and November 2008, to assess how employer and employee attitudes toward employee benefits may have changed from prior years, and, more specifically, how they may have been affected by the changing economic climate. Both sets of research interviews were fielded by Gfk Custom Research North America. More than 1,500 interviews were conducted with benefits decision-makers at companies with two or more employees, representing a mix of industries and geographic regions, and more than 1,300 interviews were conducted with full-time employees, age 21 and over, at companies with a minimum of two employees.
MetLife has relationships with over 60,000 group customers including 90 of the top 100 FORTUNE 500® companies.
MetLife is a subsidiary of MetLife, Inc. (NYSE: MET), a leading provider of insurance, employee benefits and financial services with operations throughout the United States and the Latin America, Europe and Asia Pacific regions. Through its subsidiaries and affiliates, MetLife, Inc. reaches more than 70 million customers around the world and MetLife is the largest life insurer in the United States (based on life insurance in-force). The MetLife companies offer life insurance, annuities, auto and home insurance, retail banking and other financial services to individuals, as well as group insurance and retirement & savings products and services to corporations and other institutions. For more information, visit www.metlife.com.