Bank of America Merrill Lynch Report Finds Financial Benefit Plans Key to Employer Talent Management Strategies
Study Shows Employers Feel Greater Sense of Responsibility for the Financial Future of Their Employees Following the Recession
The study finds 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.
“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
Employers also feel, almost unanimously (98 percent), that attracting younger employees is important in order 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).
Employers Feel Increased Responsibility for Financial Well Being of Employees
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 towards 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) feel 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.
Recession and Uncertainty of Entitlements Places Increased Importance on Financial Benefits, Ignites Positive Savings Actions Among Employees of All Ages
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 prior to 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
Employers Offer a
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 advisor (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 that 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
Employers Look to Enhance Financial Benefit Plans to Address the Changing Needs of Employees and Win the War for Talent
When asked whether they plan to enhance the various financial benefit plans they offer during the next two years, many employers said that they are likely to enhance their:
- Defined contribution plans (78 percent).
- Flexible savings accounts (74 percent).
- Health savings accounts (72 percent).
- Non-qualified deferred compensation plans (58 percent).
- Defined benefit plans (47 percent).
- Equity plans (39 percent).
Among employers likely to enhance these plans in the near-term, 57 percent cited doing so to keep up with the changing needs of their employees, 45 percent to help alleviate concerns over losing top talent, and 43 percent believe that a failure to do so may hinder their ability to attract new talent.
“As an industry, we must continue to introduce creative solutions that help employers remain competitive and maximize the value of the benefits they offer their employees,” added Sieg. “We are working with employers to offer greater access to professional advice that can help their employees manage their financial lives and achieve their goals, including new and expanded programs designed to help older employees live well longer.”
Workplace Benefits Report Methodology
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