More U.S. employees are satisfied with their company-sponsored retirement benefits now compared with five years ago, but satisfaction with health care benefits, especially the cost of medical benefits, has declined. This is according to a new survey by Towers Watson.
The Towers Watson Global Benefits Attitudes Survey also found that a growing number of employees are willing to sacrifice pay for more secure and generous retirement benefits, while fewer would give up pay for better employer-sponsored health benefits.
Employees Satisfied with Retirement Benefits, Increasingly Unhappy with Employer-Sponsored Health Benefits
The nationwide survey of 5,070 full-time employees found:
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Increased satisfaction with retirement benefits. Two-thirds of respondents (67%) say they are satisfied with their employer-sponsored retirement plans, including defined benefit (DB) and defined contribution (DC) 401(k) plans. This represents an increase of 13% points since 2009, with much of the increase concentrated among younger employees and those with DB plans.
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Decreased satisfaction with health benefits, largely due to cost. The number of employees who are satisfied with their health care benefits has declined from 69% in 2007 to 59% in 2013. The decrease is concentrated among older workers and those in poor health. The survey cited rising health care costs as a key factor fueling the decline, with only 38% satisfied with costs they must pay (including premium and out-of-pocket expenses) in 2013 versus 53% in 2007.
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Most employees would give up some pay for a guaranteed retirement benefit. Nearly two-thirds of respondents (62%) 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.
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Employees less willing to give up pay for health benefits. The survey found that when it comes to health benefits, however, employees are significantly less willing to sacrifice pay. 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 take a larger amount from their paycheck in return for more generous health care benefits.
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Many employees experienced a significant cost increase with their health benefits. Of those surveyed, 38% said their employer significantly increased health care premiums or out-of-pocket costs in the last two years.
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Employees are concerned about health care costs. Only two in five employees believe they can afford any medical expenses that might arise in the next 12 months. These concerns are more pronounced for mid-career, older employees, and those in poor health. The survey found that 70% of employees fear that higher out-of-pocket medical costs lie ahead.
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Retirement security is becoming increasingly important. More than half of the respondents (56%) say that retirement security has become more important to them over the last few years. The importance of security was more pronounced for older workers: Nearly eight in 10 (78%) workers age 50 or older said they are concerned about it. Conversely, only four in 10 (39%) employees under age 40 are concerned. Interestingly, the survey found that DB plan participants worry more about retirement security than participants with only a defined contribution plan, perhaps reflecting fears of further cutbacks in DB plans.
Methodology
Towers Watson’s Global Benefits Attitudes Survey examines employees’ attitudes toward their health and retirement benefits. Conducted in 12 countries between July and September 2013, the survey was completed by 22,347 employees, including 5,070 full-time workers in the U.S., representing all job levels and major industry sectors. Results are weighted by age, gender and household income to the national average of workers. The margin of error for the total sample is ±1.4%.
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