Health Insurance Still Tops Benefits List

Ninety percent of respondents ranked health insurance high in importance, the same number as in 2004, according to the survey (see Americans Still Fretful about Financial Future ). A distant second was defined contribution plans, cited by 71%, with defined benefit (55%), disability insurance (55%), and life insurance (51%) benefits rounding out the top five ranked by importance.

According to the survey, the top benefit offered by firms with 10 to 1,000 employees is health insurance (88%), followed by life insurance (65%), defined contribution retirement plans (64%), free parking (57%), and disability insurance (48%). However, the research found a significant drop in the ranking of DC and disability insurance offerings from last year (72% and 53% in 2004, respectively).

Sixty-two percent of employees were most satisfied with their employer’s defined benefit pension plan, while 54% were most satisfied with their employer’s DC plan benefit, however, the index showed a drop in satisfaction with life insurance benefits. Fifty-one percent of respondents gave this benefit a high satisfaction rating in 2004, compared with 45% in this year’s survey.

Among benefits they wished their employer offered, but didn’t, a defined benefit plan (18%) and a profit sharing/bonus plan (12%) were the top two selections.

Respondents would like to see their health insurance benefit (45%) and DC plan (14%) improved, more than other benefits. Thirty-seven percent of employees reported increased co-pays for their health insurance and 31% reported increased employee deductibles, while 16% said they were given reduced medical benefit coverage options in 2005.

Performance Anxieties

The number of employees who said a good benefits plan encourages them to perform better has dropped from 70% in 2004 to 65% in 2005. The number of employees who feel their employer is concerned about their long-term financial future also dropped, from 33% in 2004 to 25% in 2005.

The majority of employees are very concerned about their financial future (73%), and only about a quarter (29%) said they were extremely happy about their current financial state. One-fourth of employees said they had not yet planned for their retirement savings or security. Job security is a top priority for respondents – 52% ranked it as the most important, compared with 36% who ranked long-term financial future with top importance and 12% who ranked challenging work as such.

On the issue of retirement savings, the index found that 77% of employees who have retirement savings are not making changes to how their investments are invested while 23% are – 15% shifting to more stable investments, and 9% to a more volatile mix. There was a significant decline in the proportion of people moving money from volatile investments to stable investments for this year when compared to last year (21% in 2004) and a significant increase in the people not making any changes (77% in 2004).

Forty-five percent of survey respondents reported being very/somewhat satisfied with the tools provided by their employer for saving for the future. Thirty percent said they were very/somewhat dissatisfied.

Finally, an impressive 72% of respondents said they would be interested in the new Roth 401(k)/403(b) option, but 59% said they were not sure their employer would be offering it. Of those who did know their employer would be offering it, 69% said they plan to participate.

Harris Interactive conducted The Principal Financial Well-Being Index survey of 1,213 employees from November 7-17, 2005.