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Benefit Plan Trends - Volume 60, Issue 6

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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College Graduates Want a Job with Good Pay and a Collaborative Environment

A majority of college graduates entering the job market this summer want to work in a collaborative rather than a competitive workplace, but care most about compensation when applying for jobs after graduation, according to a report released by student loan marketplace LendEDU. 
The report's findings are based on a series of surveys of between 1,808 and 3,776 college students conducted nationwide from July 8, 2016, to June 5, 2017. When asked what type of company culture they prefer, 62% of the respondents said they would rather work in a collaborative environment, while the remaining 38% said they would prefer to work in a competitive atmosphere. Men were more likely than women to say they prefer a competitive environment: 43% of the male respondents, but just 34% of the female respondents, said they would rather work in a competitive than in a collaborative workplace.
Moreover, when asked whether they would rather work for a company with excellent benefits/perks but less job security, or fewer benefits/perks but more job security, 52% of respondents chose the latter option, while the remaining 48% said they would prefer to be employed at a company with more job security and fewer perks. Broken down by gender, 58% of the male respondents, but only 46% of the female respondents, chose benefits/perks over greater job security. 
Students were also asked whether they would rather work for a very small startup or a larger, more established company. More than two-thirds (69%) of respondents said they would prefer to work for a larger company than a small startup, with a larger share of the male respondents (35%) than of the female respondents (28%) saying they would rather work for a small startup.
In addition, the college students were asked which aspect of a company they consider most important when deciding where to apply. Not surprisingly, the overwhelming majority of respondents (72%) said whether the employer offers good pay is the most important factor, with much smaller shares saying their main concern is whether the employer has a strong ethical culture (14%) or a good training program (8%).
When asked how much money they expect to make at their first job after college, 36% of respondents said they expect to earn $40k to $60k per year, 26% said they expect to make under $40k annually, 21% said they anticipate earning $60k to $80k per year, while 17% indicated they expect to make over $80k annually.

Americans Seek Freedom from Financial Worries in Retirement

Older workers preparing to transition to retirement are focused on more than just the amount of their retirement savings—they want to achieve the freedom from financial concern that will allow them to spend time with loved ones and have experiences that provide meaning and purpose, a survey commissioned by financial services provider TIAA revealed.
The survey of 1,000 Americans ages 55-68 planning to retire in the next five years was conducted March 14-20, 2017. As well as investigating how near-retirees expect to finance their life in retirement, the survey looked at where these older Americans intend to live and travel in retirement, and how they expect to spend their time.
When asked what considerations are important to their definition of success in retirement, most of the near-retirees surveyed cited freedom from financial concern (95%); the flexibility to do what they want, when they want (96%); spending time with family and friends (93%); relaxing (92%); and having the time to travel (80%).
However, a majority of the older workers polled reported that they have changed their original retirement plans: while 37% of respondents said they expect to retire at the age they had planned 10 years ago, another 37% said they now anticipate retiring later, and 24% said they expect to retire earlier than originally planned.
The survey results also suggested that a large share of near-retirees have not fully prepared for retirement, with just 43% of respondents reporting that they have met with a financial advisor or that they have calculated how much money they will need annually in retirement. Of those respondents, 54% indicated that they feel extremely or very prepared for retirement, compared to 34% of those who said they have not met with an advisor.
Although some of the respondents expressed anxiety about their readiness for the future as they get closer to retirement, 43% said they feel extremely or very prepared for the transition to retirement, and another 46% indicated they feel somewhat prepared for retirement. Researchers pointed out that even though more than half (55%) of the near-retirees surveyed said they feel prepared to manage their income in retirement, only 21% said they anticipate their savings will last for their lifetime. The survey also showed that 65% of respondents who plan to rely on income from an annuity said they feel prepared to manage their income in retirement, compared to 54% of respondents who intend to draw down savings from a defined contribution retirement plan. However, just 17% of respondents reported having purchased an annuity as part of their retirement preparations.
The survey results further revealed that not all near-retirees plan to stop working after reaching retirement age: 31% of the men and 22% of the women polled said they have investigated part-time or consulting work, while 19% said they have considered volunteering. 
In addition, the survey found that large shares of respondents plan to move in retirement. While roughly the same shares of male (40%) and female respondents (38%) said they expect to move out of their current home, they differed on where they would like to go: 61% of the men but only 49% of the women said they plan to downsize to a smaller home; and 24% of the women but just 10% of the men said they would like to move closer to family and friends.

CDHP Market Share Continued To Grow In 2016

Consumer-driven health plans with high deductibles continued to gain market share in the U.S. in 2016, and appear to be having the intended effect of encouraging the insured to become more involved in their own health care, according to an analysis of survey data published by the Employee Benefit Research Institute (EBRI) and Greenwald & Associates. 
The survey of 3,295 adults with private health insurance coverage through an employer or purchased directly from a carrier or through a government exchange was conducted August 11-24, 2016. A report on the findings of the annual survey was released as an EBRI Issue Brief on May 27, 2017. The results indicated that a steadily growing share of Americans with health coverage are in a consumer-driven health plan (CDHP) associated with a high-deductible health plan (HDHP), a health savings account (HSA), or a health reimbursement arrangement (HRA). 
While 73% of the privately insured adults surveyed said they are enrolled in a traditional health care plan, 14% indicated they are enrolled in a CDHP linked to an HSA or an HRA, and 14% reported that they are enrolled in an HDHP (with a deductible of $1,300 or higher for single coverage and of $2,600 for family coverage) not linked to an HSA or an HRA. Researchers noted that among individuals with traditional coverage, a growing number have the option to choose a CDHP, and that those who choose a CDHP are remaining enrolled for a longer time. 
The survey findings showed that more than half of CDHP enrollees have an HSA, and are taking advantage of growing employer contributions. Among the respondents who said they are enrolled in a CDHP, 56% (16.3 million) indicated they have an HSA; 19% (5.5 million) said they are enrolled in an HRA; and 25% (7.3 million) said they are enrolled in an HSA-eligible health plan, but do not have an HSA. 
The study's authors observed that it is becoming increasingly common for employers to contribute to their employees' HSAs, and that the dollar amounts of these contributions are rising. In the 2016 survey, 78% of CDHP enrollees reported that their employer contributed to their account that year, up from 67% of those polled in 2014. Of those CDHP enrollees receiving an employer contribution, 20% reported a contribution of at least $2,000 in 2016, up from 10% in 2014; while 42% reported an employer contribution of $1,000-$1,999 in 2016, up from 36% in 2014. 
The survey also found that consumer behaviors are linked to CDHP enrollment, as the respondents in a CDHP or an HDHP were more likely than those in a traditional plan to report engaging in cost-conscious behaviors. For example, the survey showed that respondents in a CDHP were more likely than respondents in a traditional plan to report that they had checked whether the plan would cover care (54% vs. 44%), that they had asked for a generic instead of a brand name drug (48% vs. 37%), and that they had used an online cost-tracking tool provided by the health plan (31% vs. 20%). The results also showed that CDHP and HDHP enrollees were more likely than traditional plan enrollees to indicate that they tried to find cost information before obtaining care: nearly one-half of HDHP enrollees and 43% of CDHP enrollees said they had searched for cost information, compared with 32% of traditional plan enrollees. 
In addition, the survey respondents enrolled in CDHPs were more likely than those enrolled in HDHPs or in a traditional plan to report that they have a choice of health plans: two-thirds of CDHP enrollees said they have a choice of health plan, compared with 59% of both HDHP enrollees and traditional plan enrollees. 

Many Executives Are Flying Blind When Choosing Innovation Strategies 

While global executives value innovation, many lack confidence in their ability to innovate, and are facing challenges in aligning their innovation efforts with their business strategies, according to a report recently released by professional services firm PwC. 
The report's results and insights are based on a survey of over 1,200 executives and business leaders from 44 countries and all major sectors conducted between September 12, 2016 and January 27, 2017. More than half (54%) of respondents reported that they struggle to bridge the gap between their business and innovation strategies, and are thus flying blind as they place bets on innovation. 
Most of the respondents also indicated that they have low levels of confidence in their company's innovation prowess, with just over one-quarter saying they believe they lead their competitors in innovation. However, 20% of these innovation leaders, but only 13% of the remaining respondents, said they expect their company to grow by more than 15% in the next five years.
When asked about the metrics they use for measuring the success of their company's innovation strategies, the top response was sales growth (69%), followed by customer satisfaction ratings (43%), number of new ideas in the pipeline (40%), market share (36%), number of new products in the pipeline (31%), the net value of the innovation portfolio (28%), and time to market (24%).
The survey findings suggested that companies are becoming more inclusive, and are increasingly adopting open innovation models that bring more voices to the table, including employees and customers. When asked to name the most important internal and external partners for innovation at their organization, 60% of respondents cited internal employees, 50% mentioned technology partners, and 35% cited customers via focus groups, data mining, and other forms of feedback. Moreover, when asked what operating models their organization currently uses to drive innovation, the respondents were most likely to cite an open innovation model (61%); followed by design thinking (59%) and co-creating with customers, partners, and suppliers (55%). By contrast, only around one-third (34%) of respondents cited traditional R&D. 
In addition, the report looked at what types of companies are more focused on incremental change, and what sectors are more focused on breakthrough innovation, or making significant innovations that result in the development of major new technological or market applications. The survey results showed that the companies that are most likely to be focused on breakthrough innovation are in the technology sector (58%); followed by in the pharmaceutical and life sciences (51%), health services (47%), communications (45%), and automotive (43%) sectors.

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
p 847.741.1000 | f 847.428.8857