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Benefit Plan Trends - Volume 61, 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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Millenial Workers Report Higher Stress Levels Than Older Workers

Younger workers experience stress more frequently than their older colleagues, and employee stress in general has physical, behavioral, and cognitive side effects that can lower productivity and increase employer costs, according to a survey on the effects of stress in the workplace released by employee benefits provider Unum on April 26.

The survey of 1,232 U.S. adults conducted in January 2018 found that 39% of workers aged 18-34 report that they experience stress daily to several times a week, and just 33% said they experience stress infrequently or never. By contrast, the older baby boomers surveyed appear to be the least stressed of the age groups, with only 11% of workers aged 65 or older indicating that they experience stress daily to several times a week, and 79% reporting that they experience stress infrequently or never. The values for middle-aged workers were closer to those of the youngest than the oldest group, with 29% of respondents aged 35-64 saying they experience stress daily to several times a week, and 48% indicating they experience stress infrequently or never.

The results also showed that working women of all ages report more frequent exposure to stress than working men, with 54% of female respondents, but only 47% of male respondents, saying they experience stress on a daily to weekly basis.

Among respondents of all age groups, the top causes of stress were found to include financial stress (49%), home life and family relationships (43%), personal health (35%), job responsibilities (33%), and the health of family members (33%).

Researchers cited a recent estimate from the American Institute of Stress that stress costs the U.S. economy over $300 billion annually in absenteeism, presenteeism, turnover, lower productivity, accidents, and medical costs. They emphasized that while most stress originates outside of the workplace, it is in an employer's best interest to provide resources that proactively support employees in managing their stress before it escalates and affects their ability to do their job.

While acknowledging that stress can manifest differently from person to person, researchers pointed out that the common signs include a significant change in an employee's quality of work, professional demeanor, or personality. They recommended that employers watch for short-term responses to stress, including avoidance behavior or lack of participation in group activities, reduced reasoning or difficulty making decisions, and a tendency to work long hours; as well as for signs of long-term responses to stress, including a loss of concentration or confidence, outbursts of irritation or anger, panic attacks, and a loss of energy.


Progress in Retirement Saving Varies According To Worker Characteristics

While American workers are making progress in reaching their income replacement goals for retirement, large differences remain between those workers who are planning and saving effectively for retirement, and those who are not, according to the findings of a study of how financially prepared Americans are for retirement published in April by the Empower Institute, the research arm of retirement plan record-keeping firm Empower Retirement.

The findings of the study, "Scoring the Progress of Retirement Savers," are based on the results of a survey of 4,038 working adults aged 18-65 conducted between December 18, 2017, and January 21, 2018. When asked to identify the sources they expect to provide income to their household during the first five years of retirement, 71% of respondents mentioned Social Security, 56% cited a workplace-provided defined contribution plan, 38% said personal savings, 29% said employment or self-employment, and 19% cited a traditional pension.

More than two-thirds (67%) of the workers surveyed reported that at least one earner in their household has access to a defined contribution plan at work. The median projected income replacement percentage among all survey participants was found to be 64%; meaning that the median respondent is on track to replace 64% of his or her current income in retirement. However, the results also showed that the median income replacement percentage is 79% for respondents who indicated they have access to a defined contribution plan and are actively contributing to it, compared to 45% for those without access.

Looking at the impact of deferral rates, the analysis estimated that those respondents who are contributing under 3% of pay have a median lifetime income replacement percentage of 59%, while those who are contributing 10% or more have a median lifetime income replacement percentage of 128%. Focusing on the effects of automatic features, the analysis showed that respondents who were auto-enrolled in a retirement plan have a median lifetime income replacement percentage of 95%, compared to 84% for those who opted in; and that respondents in a plan with auto-escalation have a median retirement income replacement percentage of 107%, compared to 84% for those in a plan without this feature.

To explore the factors that might inhibit retirement plan participation, respondents were asked which circumstances would likely prompt them to start contributing to or to increase their contributions to a plan. Nearly one-third (32%) of the workers surveyed cited paying down debt, 22% said receiving a raise, and 12% said reducing their overall spending.

The analysis also revealed that respondents closest to retirement have the lowest projected replacement percentages, while those furthest from retirement have the highest projected replacement percentages: the millennials surveyed were found to be on track to replace 75% of their income, while the median projected income replacement percentage for the early boomers was shown to be just 55%.

The study additionally uncovered large differences in projected income at retirement based on gender, as the median projected income replacement percentage was 71% for the male respondents, but just 59% for the female respondents. Researchers attributed this gender gap in part to the somewhat higher retirement plan participation rates among men (69%) than among women (66%), as well as to the lower average contribution rates among women than among men.

The findings further indicated that there are important differences in projected income replacement based on the industry in which respondents are employed: the median scores were found to be highest among respondents in the financial services industry; and lowest among those in health care, social assistance, trade, transportation, and utilities.


Health and Other Workplace Benefits Continue To Be Valued By Employees

The health plans and other employee benefits provided by employers in 2017 remained similar to those offered in previous years, and these benefits continue to be valued by employees, according to a study published on April 10 by the Employee Benefit Research Institute (EBRI) and Greenwald & Associates.

The results of a survey of 1,518 U.S. workers aged 21-64 conducted June 13-22, 2017, are reported the issue brief "The State of Employee Benefits: Findings from the 2017 Health and Workplace Benefits Survey." The annual survey covered a wide array of topics related to employee benefits, including employees' knowledge of their benefits, their confidence in making benefit decisions, and their satisfaction with their benefits package.

The findings indicated that the benefit offerings of employers generally held steady between 2013 and 2017, with the most frequently offered benefits in 2017 being health insurance (67%), dental insurance (59%), and retirement savings plans (57%). The study also noted, however, that the shares of employees with access to certain types of benefits declined between 2013 and 2017. For example, 29% of respondents in 2017, down from 32% in 2013, said they are offered long-term disability insurance; while 26% of respondents in 2017, compared to 29% in 2013, said they have access to a traditional or defined benefit pension plan.

The 2017 survey also showed that most employees reported having access to some paid sick and/or vacation leave in the workplace: 84% of respondents said they receive paid vacation time, and 71% indicated they receive sick leave. Moreover, 45% of respondents reported that their employer offers paid maternity leave, and 26% said their employer provides paid paternity leave.

In addition, 52% of employees surveyed in 2017 reported that they understand their health benefits, though only 43% indicated they understand their non-health benefits very/extremely well. The study's authors pointed out that both of these shares had declined from 2016, when 61% of respondents indicated they understand their health benefits and 48% said they understand their non-health benefits very/extremely well.

The 2017 results also showed, however, that most employees are satisfied with their benefits: 48% of respondents indicated they are very or extremely satisfied with their benefits, while another 36% said they are somewhat satisfied. Moreover, the survey found that employee satisfaction with their benefits appears to be related to overall job satisfaction, as respondents who said they are very/extremely satisfied with their benefits were more likely to report feeling very/extremely satisfied with their job.

In addition, the 2017 survey showed that benefits continue to be valued by employees: 83% of respondents said health insurance is a very or extremely important consideration for them when deciding whether to stay in or change jobs, while 73% said a retirement savings plan is an extremely or very important factor for them in assessing whether to stay in or switch jobs. At the same time, however, just 49% of the employees surveyed said are very or extremely confident that in three years' time their employer will provide benefits similar to those offered today.


Business Leaders See Recruiting and Retaining Talent as Vital To Success

Alongside government regulation and cyber crime, business leaders perceive that the biggest threats to their company's success are challenges related to recruiting and retaining talent, the results of a report on confidence levels among global CEOs and CMOs released on April 24 by the Worldcom Public Relations Group indicated.

The report's findings are based on the results of a survey of 585 chief executive officers (CEOs) and chief marketing officers (CMOs) of all business sizes in the U.S., Europe, and Asia. The survey asked business leaders about their confidence levels on a range of issues. The results showed that respondents are most confident in the ability of their organization to satisfy or exceed customer expectations, to have the people and skills needed to achieve its objectives, and to outperform competitors; and are least confident in the ability of their organization to protect itself against cyber crime, to attract and retain the best talent, and to have the technical resources to achieve its objectives.

When asked to identify the factors they believe will have the most influence on their company's success in the next 12 months, the top factor cited by the business leaders surveyed was their organization's ability to attract the best talent because of the quality of its employer brand, followed by the strength of the global economy, their company's access to affordable finance, and changes in the political environment in their country. Smaller shares of respondents said they believe global trade agreements, global instability and the threat of war, the arrival of disruptive competitors, or global warming and extreme weather events will strongly affect their company's success over the coming year.

The results also showed that the share of business leaders who are planning to give employees—rather than other audiences, such as shareholders and government officials—the most attention in the year ahead was 43% higher in the 2018 survey than in a similar survey conducted in 2017. The findings further indicated that respondents at organizations headquartered in the U.S. have higher overall confidence levels than their counterparts in other countries, while respondents in Asia have the lowest confidence levels. In addition, the survey found that business leaders' confidence in the ability of their organization to meet challenges declines with the size of the respondents' company.

Researchers emphasized that younger leaders seem more attuned to macro threats and macro business implications than their older counterparts, noting that much larger shares of respondents under age 35 than over age 45 report seeing extreme weather and climate change, energy costs, data protection, and global instability as among the biggest threats to their company's success. Older leaders, by contrast, were found to be more optimistic than their younger counterparts about challenges related to the economy, competition, or customer satisfaction.


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 © 2018 Liberty Publishing, Inc. All rights reserved.




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