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Benefit Plan Trends – Volume 60, Issue 11

Lundstrom Insurance Agency, Inc.

2205 Point Blvd., Suite 200
Elgin, Illinois 60123
Phone: (847) 741-1000
Fax: 847-428-8857

This publication intends to provide accurate information pertaining to the subject matter covered, however, it should not be considered as legal or tax advice. It is published and distributed with the understanding that neither the publisher nor Lundstrom Insurance Agency is rendering legal or tax advice. Before taking any action, you should always obtain specific advice and assistance from a competent attorney or tax advisor.

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Employers Are Slow To Formalize Workplace Flexibility Programs

Although most employers claim to be committed to workplace flexibility, the majority of companies are still failing to offer the formalized workplace flexibility programs and the part-time, telework, and job-sharing opportunities that are linked to higher employee engagement and satisfaction levels, according to the findings of an annual report on workplace flexibility released in October 2017 by human resources association WorldatWork. 
Based on 295 survey responses from WorldatWork members collected between May 17 and June 14, 2017, the report found that large majorities of respondents believe flexibility has a positive or extremely positive effect on employee engagement (64%), motivation (65%), and satisfaction (71%). Nonetheless, just 19% of the employers surveyed said they offer flexibility options to their whole workforce, while 36% said they only offer flexibility on a case-by-case basis with no widespread access. 
Researchers observed that while flexibility practices vary by organization, the overall prevalence of these programs has remained fairly consistent since 2013, when a similar survey was taken. The results of the 2017 survey showed that the majority of organizations offer telework on an ad-hoc basis (89%), flexible start and stop times (86%), part-time schedules (79%), phased return from leave (62%), telework on a regular weekly (61%) or a monthly basis (61%), and shift flexibility (51%). Smaller, but still sizable shares of respondents reported that they offer a compressed workweek (45%), full-time telework (38%), and phased retirement (32%). By contrast, relatively few respondents indicated that they offer career on/off ramps (16%) or job sharing (12%).
When respondents were asked what technologies they use with teleworking employees, more than half said they use a virtual private network (VPN) (64%), communication and collaboration software (60%), and instant messaging programs (54%). The results also showed that significant shares of employers cover employee expenses associated with telework, including the cost of laptops (57%), smartphones (31%), mobile device data/voice plans (31%), and software (30%) for teleworking employees. 
While a plurality of respondents (41%) said they find it difficult to estimate the productivity of teleworking employees, 57% said they believe that teleworkers are at least as productive as employees working in the office. However, the results also showed that relatively few of the employers surveyed offer specific training on how to be successful while teleworking (11%) or on managing teleworkers (21%).
The findings also indicated that both the guiding principles and the administration of flexibility programs are informal in the vast majority of organizations: 52% of respondents said they have a flexibility strategy or philosophy with few or no written policies that relies primarily on the discretion of managers, while only 14% said they have a formal, written document. 
In addition, the survey found that just 16% of respondents reported that they consistently promote their flexibility programs when recruiting new talent, even though more than half (51%) agreed that being informed of flexible work options has a positive impact on the likelihood that a candidate will accept an offer. 

Workers Confident About Benefit Choices Despite Knowledge Gaps

American workers are feeling increasingly confident about their benefit choices, but they may not fully understand the choices they are making, and continue to struggle to understand the benefits information their employer provides, according to the results of two studies that analyzed the trends, attitudes, and use of employee benefits among the U.S. workforce released by voluntary insurance benefits provider Aflac. 
A national online survey of 5,000 U.S. workers, conducted January 26-February 17, 2017, found that of the respondents who receive benefits from their employer, 67% of respondents are confident they understood all of the benefits they signed up for; and 55% agreed that completing their annual health benefits enrollment made them feel secure, like being tucked in at night, or accomplished, like they just finished a marathon. 
However, the survey results also revealed that large shares of employees may be making benefit decisions without complete knowledge of the plan. When asked about their understanding of specific features of their health care plan, like deductibles, co-pays, and providers in their network, only 24% of respondents answered that they understood everything. 
The findings further indicated that 67% of the surveyed employees say they find reading about their benefits is complicated, long, and stressful. When asked what changes employers could make to improve their benefit enrollment experience, the top responses were "simpler language" and "more options."
The results also suggested that satisfaction with benefits is linked to job satisfaction: 78% of respondents who said they are extremely or very satisfied with their benefits also indicated they are extremely or very satisfied with their job, compared to 45% of those who reported they are somewhat satisfied with their benefits and 30% of those who said they are not very or not at all satisfied with their benefits. 
A separate survey was conducted August 24-28, 2017, among 1,000 20- to 26-year-olds, employed either full or part time. The aim of the survey was to find out how Millennials and members of Generation Z who are now entering the workforce feel about their first benefits enrollment experience. 
Of the respondents currently on their parents' health care plan (35%), more than half (54%) said they are leaving their parents' plan in the next year to purchase their own benefits for the first time. More than two-thirds (69%) of those on their parents' plan admitted they do not know how much their health insurance coverage costs, even though 41% indicated they make financial contributions to their parents' plan.
The results also showed that 22% of the young adults surveyed associate health care benefits with independence, but only 19% said they feel confident, and just 31% said they feel prepared to select their own health care plan. When asked to identify their most pressing concerns about choosing their own plan, the top responses were cost (44%) and understanding how health insurance works (36%).

Challenges Facing the U.S. Retirement System 

As traditional pensions are declining and individuals are increasingly responsible for planning and managing their own retirement savings accounts, the Federal government should introduce and strengthen policies aimed at ensuring that Americans have adequate retirement incomes, a special report to Congress released by the Government Accountability Office (GAO) recommended. 
The report, "The Nation's Retirement System: A Comprehensive Re-evaluation Is Needed to Better Promote Retirement Security," was published in October 2017. Its findings were drawn from prior work and the research of others, as well as insights from a panel of retirement experts on how to better ensure a secure and adequate retirement for all Americans. 
The authors noted that over the past 40 years, changes have occurred to the nation's current retirement system, which is made up of three main pillars: Social Security, employer-sponsored pensions or retirement savings plans, and individual savings. They warned that many of these changes have made it harder for individuals to plan for and effectively manage retirement. 
The authors pointed out that Social Security's retirement program is projected to be unable to pay full retirement benefits beginning in 2035, which could cause future benefits to be reduced or delayed. They described this situation as highly problematic given that many Americans have come to rely almost exclusively on these benefits in retirement: in 2015, 34% of households aged 65 or older received 90% or more of their income from Social Security. 
Meanwhile, researchers observed, outside of employer-sponsored plans, individuals' retirement savings are often low or nonexistent. According to the report, the personal savings rate in the United States trended steeply downward between 1975 and 2005, from 13.9% to 2.2% of disposable income; and has since recovered somewhat, but has not yet reached its pre-1975 level. 
Turning to private employer-sponsored plans, the authors noted that there has been a marked shift away from employers offering traditional defined benefit (DB) pension plans to defined contribution (DC) plans, such as 401(k)s, as the primary type of retirement plan, and that this shift has increased the risks and responsibilities for individuals in planning and managing their retirement. They also cautioned that many DB plans are at risk because the Pension Benefit Guaranty Corporation (PBGC), which insures most DB plans, has substantial liabilities, especially in its multiemployer program. 
In addition, researchers pointed out that many individuals still lack access to an employer-sponsored plan, or are not saving enough in these plans to provide an adequate retirement. They observed that while around 66% of private-sector workers were offered coverage in an employer-sponsored plan in 2016, participation in such plans varies greatly by sector and by income. For example, they noted, in 2016, 89% of workers in information services had access to an employer-sponsored plan, compared with 32% of workers in the leisure and hospitality industry. They also cited an analysis of 2012 data showing that 84% of workers in the highest, but only 40% of workers in the lowest income quartile had access to an employer-sponsored plan.
The researchers emphasized that DC plan participants face other barriers to saving, such as high retirement plan fees; difficulties navigating complex financial decisions to plan for and manage their accounts; and a substantial risk of losing all or a portion of their savings when other needs arise or their life circumstances change, such as when leaving an employer mid-career. 
Drawing on the input of the expert panel and previous research, the authors identified five policy goals for a reformed U.S. retirement system: promoting universal access to a retirement savings vehicle, ensuring greater retirement income adequacy, improving options for the spend-down phase of retirement, reducing complexity and risk for both participants and employers, and stabilizing fiscal exposure to the Federal government. 

Companies Increasingly Value Global Mobility for Employees

Human resources professionals are approaching talent mobility with a new sense of purpose and support from leadership, as employee mobility is being transformed to better support overall corporate growth strategies, according to the results of a survey conducted by talent mobility solutions provider BGRS. 
Released on October 18, the survey reflects input from more than 120 talent mobility leaders and human resource professionals, representing more than 12 million employees worldwide. The results showed that 63% of respondents indicate that employee mobility is high on their organizations' leadership agenda. The survey also found that 85% of respondents say they have recently made, are currently making, or are planning to make strategic changes to the way employee mobility is managed in their organization, primarily to align their primary remit with the overall business strategy, to develop innovative talent strategies, and to help business leaders achieve their objectives.
In addition, more than one-quarter of the survey respondents (27%) said that in an increasingly globalized business landscape, international work experience is a prerequisite to joining their company's senior leadership team. According to researchers, this finding points to a clear generational shift. They observed that while only 22% of current Fortune 100 CEOs have international work experience, and that of the 10 oldest Fortune 100 CEOs, only two have taken international assignments; among the youngest 10, eight have worked outside of their home country.
Moreover, nearly half of survey respondents (49%) indicated that the main reason they are making improvements to the mobile employee experience is to increase employee satisfaction. Researchers observed that this finding demonstrates that career management is growing in importance for companies who want to continue to attract top-tier candidates for strategic leadership assignments and to retain high-performing employees in whose development they are investing. 
The survey results also underlined that as global mobility moves onto the senior leadership agenda, having robust, accurate data has become a necessity.

The information contained in this newsletter is for general use, and while we believe all information to be reliable and accurate, it is important to remember individual situations may be entirely different. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. This newsletter is written and published by Liberty Publishing, Inc., Beverly, MA. Copyright © 2017 Liberty Publishing, Inc. All rights reserved.

2205 Point Blvd. Suite 200 | Elgin, IL 60123
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