NEW YORK--(BUSINESS WIRE)--
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, according to a survey by global professional services company Towers Watson (NYSE, NASDAQ: TW). 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 health benefits.
The nationwide survey of 5,070 full-time employees found that two-thirds of respondents (67%) say they are satisfied with their employer-sponsored retirement plans, including defined benefit (DB) and 401(k) plans. That’s a jump of 13 percentage points since 2009, with much of the increase concentrated among younger employees and those with DB plans. Conversely, 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 cited rising 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.
“The economic uncertainty and corporate cutbacks over the past few years have given employees a reason to evaluate their finances and retirement plans,” said 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 workforce. Most employees view their employer plan as their primary retirement savings vehicle, perhaps explaining why they are willing to give up a portion of their paycheck for more generous and secure retirement benefits.”
Indeed, 62% of survey respondents 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. However, when it comes to health care benefits, 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.
“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. 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,” said David Speier, a senior consultant at Towers Watson.
Retirement Security 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.
“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. 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,” said Speier.
About the Survey
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%.
About Towers Watson
Towers Watson (NYSE, NASDAQ: TW) is a leading global professional services company that helps organizations improve performance through effective people, risk and financial management. The company offers consulting, technology and solutions in the areas of benefits, talent management, rewards, and risk and capital management. Towers Watson has more than 14,000 associates around the world and is located on the web at towerswatson.com.
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