According to the First Quarter 2003 Principal Financial Well Being Index, employees haven’t lost their interest in workplace retirement savings programs. The workers surveyed rated DC plans as the second most important employer-sponsored benefit, behind health care coverage. Some 17% wished for a defined benefit retirement plan while 11% of workers voted for a profit-sharing/bonus plan. The survey also found a drop in demand for stock options with only 2% putting the options at the top of their wish list, compared to 8% two years ago.
The survey also revealed that 54% of the respondents are satisfied with their defined benefit plans, up 10% from the Fourth Quarter 2002 Index. Some 62% indicated that having a good benefits plan “keeps me working for my current company.”
The survey revealed some encouraging news about annual salaries, with 57% of the respondents indicating that they have already gotten or anticipate receiving an average 4.3% raise in 2003. In addition, the majority of workers (68%) are working the same number of hours per week, compared to last year at the same time. However, 22% of the respondents did note an increase in the hours they’re putting in, with an average of almost ten additional hours per week this year compared to last.
The study also found that 83% expect a tax refund, up from 80% in the Second Quarter 2002 Index. Some 50% plan to use the money to pay down short-term debt, up 5% from the Second Quarter 2002. Some 31% plan to save or invest the extra money, while only 16% plan to spend it on a big-ticket item.
Respondents also confessed they did have a series of worries during the current Iraq war:
- long-term financial security, 61%
- staying employed, 33%.
- physical safety and security, 24%.
Interestingly, respondents seemed to grow less fretful about the war’s impact between the main survey taken in early March and a separate follow-up study done last week. When quizzed during the main study, 49% said a US war with Iraq in the next six months would not impact their overall financial strategy. Some 39% said they would cut back on expenses.
Last week’s follow up revealed that 69% of American workers are not changing their financial strategy because the US is at war. Some 23% did indicate they are cutting back on expenses.
Aside from the war, 52% generally placed job security first among their general concerns (down from 57% in the last quarter) and 34% placed their long-term financial future first (up from 29% in the last quarter). Some 14% continued to rank challenging work first.
Among the other key findings of the First Quarter 2003 Principal Financial Well-Being Index:
- Only one in four employees agrees with each of the following statements: “I am extremely happy about my current financial well-being” (25%) and “My company is concerned about my long-term financial future” (26%).
- Over the last two years, the survey has also shown a steady increase in the number of employees changing from volatile to more stable investments.
The latest Index, a quarterly survey of over 1,100 employees of small and midsize businesses, was sponsored by the Principal Financial Group and conducted by Harris Interactive. It is available at www.principal.com .
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