Recession Has Taken Toll on Employee Retirement and Benefits

January 28, 2010 ( - More than half (52%) of respondents to a Towers Watson survey said the percentage of their employees working past their desired retirement age is higher than it was before the financial crisis.

Nearly a third (31%) said they expect that percentage will be even higher next year, according to a press release.

In addition, 30% of companies reported employees have on average reduced their contributions to 401(k) plans from pre-financial crisis levels, and 51% have seen an increase in employees’ hardship withdrawals from pre-financial crisis levels. Almost half (48%) of U.S. respondents said employees had shifted 401(k) plan allocations out of equities; however, 37% expect employees to shift back toward equities a year from now, the press release said.

Thirty-two percent of companies reported that their employees’ cost of health care coverage is higher now than it was before the financial crisis, and 38% indicated they think it will be even higher a year from now.

While 28% of employers expect that, a year from now, they will put more emphasis on ensuring benefits provide a desired level of security for employees, the survey found much larger numbers of respondents expect to increase their focus on controlling and reducing benefit costs (53%) and managing the risk and volatility of those costs (49%).

Recession Improves Productivity?

Not surprisingly, 41% of respondents to the Towers Watson survey agree that it’s easier to retain talent now than it was before the financial crisis; however, 51% think that retention will be more difficult a year from now. Respondents also noted a rise in productivity over the past year, with just over half (55%) agreeing that employee productivity had risen compared with pre-financial crisis levels, and 48% expecting it will continue to rise by next year.

Respondents' reports on the recession’s impact on employee engagement are mixed. While 30% report lower engagement today, 28% believe employee engagement has risen since before the financial crisis. For 2010, far more companies expect engagement to rise (39%) than decline (5%).

The survey found that 92% of respondents plan to hire in 2010. However, 36% are also planning targeted workforce reductions - down from the 58% that have done so since the financial crisis began.

The survey, based on responses from 118 mostly large employers in the United States and 459 employers globally, was conducted in early January.

The survey report is available at