The latest release of the annual Towers Watson Global Benefits Attitudes Survey finds that nearly seven in 10 U.S. employees say they are satisfied with their employer-sponsored retirement plans, including both defined benefit (DB) and defined contribution (DC) arrangements. That’s a jump of 13% since 2009, with much of the increase concentrated among younger employees and those with access to DB plans.
“The economic uncertainty and corporate cutbacks over the past few years have given employees a reason to evaluate their finances and retirement plans,” explains Kevin Wagner, a senior consultant at Towers Watson. “While more workers are happy with their retirement benefits, they are increasingly concerned that their retirement income will come up short when they exit the work force.”
Most employees view their employer plan as their primary retirement savings vehicle, Wagner says, perhaps explaining why they are willing to give up a portion of their paycheck for more generous and secure retirement benefits. The survey results show 62% of employees would give up some pay for a guaranteed retirement benefit, a sharp increase from 46% in 2009. Additionally, nearly six in 10 (58%) would sacrifice pay for more generous retirement benefits.
In another positive sign, more than half of U.S. workers (56%) say that retirement security has become more important to them over the last few years. The importance of income security was more pronounced for older workers, with nearly eight in 10 (78%) workers age 50 or older citing such concerns. Slightly less than four in 10 (39%) employees under age 40 are concerned about sustainable retirement income.
Interestingly, the survey found that DB plan participants worry more about retirement security than participants with only a DC plan, perhaps reflecting fears of further cutbacks in DB plans.
“Given employees’ widespread concern about retirement security and readiness, this may be the ideal time for employers to reevaluate their employee benefits and strategies for the future,” says David Speier, a senior consultant at Towers Watson. “Addressing employees’ preferences for retirement and health care benefits could help employers provide a more engaging work environment, and at the same time help workers in their efforts to prepare for a comfortable and financially secure retirement.”
The benefits attitude survey paints a more pessimistic picture regarding health benefits, Wagner says. For instance, the number of employees who are satisfied with their health care benefits has declined from 69% in 2007 to 59% in 2013. The downward trend is most pronounced among older workers and those in poor health. The survey cites rising costs as a key factor fueling the decline, with only 38% of employees saying they are satisfied with costs they must pay (including premium and out-of-pocket expenses) for health benefits in 2013 versus 53% in 2007.
Perhaps as a result of their relative dissatisfaction, employees appear far less willing to sacrifice pay for expanded health benefits. Only one-third (34%) would give up some pay for more predictable health benefits, a drop from 42% in 2010. An even smaller percentage (27%) would be willing to divert a larger amount from their paycheck in return for more generous health care benefits, according to the survey.
“Rising medical costs have prompted employers to shift a larger share of health care costs to workers, many of whom are already feeling financially stressed from the recession and benefit cutbacks,” Speier says. “While employees rely on and value their health care benefits, they are clearly not happy about their health care costs. At a time when costs are consuming a significant share of their household budget, it’s no surprise that employees are less willing to trade some pay for either more generous health benefits or more predictable costs.”
An executive summary of the annual Towers Watson Global Benefits Attitudes Survey is available here.
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