Financial Planning Benefit Offerings Have Increased

June 27, 2011 ( - Employer-sponsored retirement plans continue to shift away from defined benefit plans toward defined contribution savings plans and Roth 401(k) savings plans, according to SHRM’s 2011 Employee Benefits research report.

Overall, defined contribution retirement plans (93%) were the most common type of plan offered, followed by Roth 401(k) savings plans (31%), traditional defined benefit pension plans (22%) and cash balance pension plans (8%). In addition, 11% offered supplemental executive retirement plans (SERPs).   

The only retirement savings and planning benefit the research found that was offered by fewer organizations in 2011 compared with 2007 was the defined benefit pension plan (open to all employees). Twelve percent of all companies reported their defined benefit pension plans were frozen, making them unavailable to newly hired employees.  

Forty-one percent of organizations automatically enrolled employees into their defined contribution plans unless employees actively opted out, 15% provided automatic escalation of salary deferral amounts for defined contribution plans, and 1% offered 401(k) debit cards. Organizations also offered financial planning benefits such as individual investment advice (42%) and retirement preparation planning advice (37%).   

Five percent reported offering a phased retirement program (a reduced schedule and/or responsibilities prior to full retirement), which offers older workers a way to ease into retirement while passing along institutional knowledge to others.   

Even though the percentage of companies that offered defined contribution plans continued to increase, there was a slight decline in the percentage of companies that offered employer-matching contributions, the report said. Seventy percent of organizations provided an employer match on some or all of the employee’s contributions. Sixty-nine percent of organizations offered defined contribution plan loans.  

Although the percentage of HR professionals that reported their companies have been negatively affected by the economic recession has slightly decreased over the last year, there has been a slight increase in the percentage of respondents reporting their benefits offerings have been negatively affected by the economy. In 2011, 77% reported their employee benefits offerings had been negatively affected (12% reported being affected to a large extent and 65% to some extent). This is a 5% increase over the last year. 

Organizations spent on average 19% of an employee’s annual salary on mandatory benefits, 19% on voluntary benefits and 11% on pay for time not worked benefits.  

More than eight in ten (81%) organizations reviewed their benefits programs annually, and 7% reported reviewing them even more frequently. Only 2% of organizations never reviewed their benefits programs.

Other Benefits  

SHRM’s 2011 Employee Benefits research report indicates health savings accounts (HSA) are becoming more and more prevalent, while HMO plans continue to decline in popularity.   

The most frequently offered type of health insurance was a preferred provider organization (PPO) plan, offered by 84% of respondents’ companies. One-third (33%) of organizations offered health maintenance organization (HMO) plans. A point of service (POS) plan was offered by 22% of organizations.  

More than one-third of companies (35%) provided HSAs. Twenty percent of organizations made contributions to these accounts. Twenty-one percent of organizations offered health reimbursement arrangements.  

Almost three-quarters (73%) of organizations offered medical flexible spending accounts (IRC Section 125, for all expenses), and 45% reported offering health care premium flexible spending accounts.   

Almost one-third (31%) of organizations offered rewards or bonuses for completing certain health and wellness activities. Some organizations offered health care discounts to employees for participating in health-related assessments or programs: 14% of organizations provided health care premium discounts for getting an annual health risk assessment, 12% provided a discount for not using tobacco products, 11% offered discounts for participating in a wellness program, and 7% provided health care premium discounts for participating in a weight loss program.  

SHRM also found financial and compensation benefits have experienced considerable declines throughout the last five years. The most significant decreases were in educational assistance programs, incentive bonus plans for executives, life insurance for dependents and undergraduate educational assistance.  

Paid time off plans continue to gain in popularity, while the prevalence of paid vacation plans remains stagnant.  

While adoption assistance, elder care referral service and foster care assistance have experienced significant declines over the last five years, family-friendly benefits have remained relatively stable throughout recent years. After gradual declines over the last five years, a number of flexible working benefits have experienced positive gains since 2010.  

Over the last five years, there were several decreases in the number of organizations offering employee services benefits. The following benefits experienced sharp declines: executive club memberships, legal assistance/services, mentoring programs, organization-sponsored sports teams, professional development opportunities and travel planning services.  

Housing and relocation benefits have experienced significant declines over the last five years. These benefits included assistance selling previous home, cost-of-living differential, down payment assistance, location visit assistance, mortgage assistance, rental assistance, spouse relocation assistance and temporary relocation benefits.  

The report can be downloaded from here.