New York — June 16
A Bank of America Merrill Lynch study found that the vast majority of employers (94 percent) believe it is important to retain older employees for a longer period of time before they retire in light of the talent and skills they possess. In an effort to retain these employees, 50 percent of employers surveyed now offer flexible or customized work schedules, 33 percent are implementing education around retirement income and health care topics, 32 percent offer continuing education and development opportunities, 22 percent give employees the opportunity to work remotely, and 21 percent are offering extended benefits to older employees.
The company announced findings from its Workplace Benefits Report, a new study focused on the role financial benefit plans play in employers’ talent management strategies and the overall financial well-being of their employees. The study includes responses from 650 C-level executives, HR and benefit plan leaders and examines ways in which employers are helping to address the financial needs of perhaps the most demographically diverse workforce in history.
“Longer life expectancies and baby boomers’ desire or need to keep working are leading to an aging population of American employees that will require more age-friendly workplaces and benefit plans designed to meet the unique needs of multiple generations,” said Andy Sieg, head of retirement services for Bank of America Merrill Lynch. “HR leaders are playing more strategic roles within organizations seeking to harness the experience and intellectual capital of older employees in order to remain competitive, while adapting both physical and operational aspects of their businesses to accommodate them.”
Employers also feel, almost unanimously (98 percent), that attracting younger employees is important to broaden the talent and skills of their workforce. According to the study, six out of 10 employers cite retirement benefits among the top factors that help attract new talent (59 percent) and that create employee loyalty (58 percent), second only to health care benefits (69 percent and 73 percent respectively).
As many employers are evolving to meet the needs of multigenerational workforces, coming out of the recession they are also feeling an increased sense of responsibility toward the financial future of their employees. Following the recent economic downturn, 59 percent of employers feel a greater responsibility to help employees meet their financial goals. More than half (53 percent) think this responsibility includes providing both financial benefit plans as well as access to financial education and advice.
When asked why they offer financial benefit plans, beyond helping attract (68 percent) and retain (76 percent) talent, nearly seven out of 10 (68 percent) employers cited doing so out of concern for their employees’ financial well-being, and 64 percent indicated that doing so was part of their company’s core values. Remaining competitive (39 percent) and helping employees be more productive (39 percent) are also among the top reasons.
Since the recession began, nearly half (47 percent) of employers have seen an increase in the frequency that prospective employees inquire about the financial benefit plans offered by their company. Employers have also observed a number of behavioral shifts in terms of how current employees are engaging with their retirement benefit plans. When compared to before the downturn:
• 58 percent of employers find that employees approaching retirement are taking a more active, hands-on approach to their financial benefit plans.
• 36 percent find that younger employees are enrolling earlier into financial benefit plans.
• 26 percent find that employees are contributing enough to receive their full company match at an earlier age.
• 19 percent find that employees are maxing out contributions at an earlier age.
Given the uncertainty about the future of Social Security, and with employers moving away from traditional pension plans, employees may become increasingly reliant on defined contribution plans, such as a 401(k) plan, when saving and investing for the future. Assuming this trend continues, most employers (75 percent) anticipate that a greater number of employees will enroll in 401(k) plans or increase their contribution rates. Employers also anticipate increased demand for access to 401(k) saving and investment advice (79 percent), and that older employees will work longer to extend the benefits of these plans (84 percent).
In addition to offering financial vehicles to help employees save and invest for retirement, many employers now offer access to advice and services that help employees prepare for retirement (61 percent), pay for health care (51 percent), understand investments (41 percent) as well as stock options or an equity plan (27 percent), manage day-to-day budgeting and spending (17 percent), and monitor progress toward meeting financial goals (27 percent).
Employers also offer a range of tools to assist their employees in managing their personal finances, including providing access to:
• Relevant research or literature to help inform their investment decisions (45 percent).
• A one-on-one relationship with a financial adviser (39 percent).
• Intuitive online tools to help them manage their banking and investing (38 percent).
• Financial seminars relevant to their life stage (34 percent).
Despite offering a broader range of financial education and advice, employers find that employees are not taking full advantage of these resources. Fifty-nine percent of employers find that less than half of their employees take advantage of the financial education and advice made available to them. When asked why their workforce fails to take advantage of these resources, 54 percent of employers believe their employees do not view it as relevant to them, and that their employees perceive them as too complicated (54 percent). Forty-six percent believe their employees may simply be too busy and 23 percent may not know these resources exist.
When asked how frequently they communicate the broader value of their financial benefit plans to employees, 86 percent of companies cited doing so just twice annually or less frequently, and 61 percent provide only basic information about financial benefits when they do communicate. Nearly one-third (31 percent) of employers admit they could do a better job of communicating the broader value of these offerings to their employees.
“With a diverse workforce, it becomes increasingly important to provide employees with financial education and advice tailored to their unique needs and life stage,” said Kevin Crain, head of institutional client relationships for Bank of America Merrill Lynch. “Employers that make financial benefit plans more personalized and easy to engage with, and who consistently communicate the broader value of these plans, can distinguish themselves in the market, potentially increase employee loyalty and empower their workforce to take advantage of the resources available to them.”
Source: Bank of America Corp.