As the economy expands, the needs and importance for better employee benefits also increases.
Harris Interactive, an American market research company, was commissioned by the Principal Financial Group, the nation's 401(k) leader, to conduct an online research survey called the Principal Financial Well-Being IndexSM Executive Summary-First Quarter 2007. The survey was conducted between January 24-February 5, 2007 and with employees of small to mid-sized businesses (that being an employee count of between 10-1,000 people). The purpose of this survey is to identify concerns about health and retirement benefits, as well as workplace "trends".
Key findings
- Health insurance is rated as the most important benefit and the benefit that most employees feel needs improvement
- There's been an increase in deductibles
- The costs of co-pay have risen
- Availability of voluntary benefits (dental, vision, short- or long-term disability) have increased
- Two-thirds of employees believe that offering better employee benefits will entice employees to work harder and perform better
- If financial planning was offered by employers, three out of four employees would use it
- When it comes to wage increase versus a 401(k) matching plan, almost 60 percent of employees would take the wage increase
- Of those who have Defined Contribution Plans and have money in their account, almost half haven't made changes nor rebalanced
Benefit Importance
As it can be noted from the table below, health insurance and defined contribution plans are rated the most important benefits to employees, while stock options are rated as the least important benefit to employees. This is an interesting statistic seeing as many companies tend to offer stock options as a type of benefit, especially to those working in upper management.
Importance of
Benefit Program |
1 Qtr
2007 EE |
1 Qtr
2006 EE |
1 Qtr
2005 EE |
1 Qtr
2004 EE |
1 Qtr
2003 EE |
| Health Insurance |
91%SIG |
86% |
89% |
92% |
88% |
| Defined Contribution Plans |
72% |
68% |
73% |
74% |
70% |
| Defined Benefit Plans |
56% |
55% |
56% |
59% |
57% |
| Disability Insurance |
52% |
55% |
53% |
58% |
56% |
| Life Insurance |
44%SIG |
50% |
47% |
53% |
54% |
| Profit Sharing/Bonus |
43% |
44% |
45% |
47% |
41% |
| Stock Options |
17% |
20% |
19% |
20% |
80% |
| SIG= Significant at the 95% confidence level |
What benefits should be improved upon
Health insurance still remains at the top of the list for importance, as well as what needs to be improved upon. As it can be seen from the chart below, improvement of health insurance is over 50 percent greater than the call for a defined contribution plan.
|
Ranking |
Benefits |
1 Qtr
2007 EE |
1 Qtr
2006 EE |
1 Qtr
2005 EE |
1 Qtr
2001 EE |
| 1 |
Health Insurance |
45% |
43% |
43% |
40% |
| 2 |
Defined Contribution Plan |
17%SIG |
13% |
16% |
25% |
| 3 |
Profit Sharing/Bonus Plan |
6% |
6% |
5% |
9% |
| 4 |
Defined Benefit Plan |
6% |
5% |
3% |
4% |
| 5 |
Life Insurance |
3% |
3% |
3% |
2% |
| SIG= Significant at the 95% confidence level |
Defined Contribution Plans
A comparison of employees with a Defined Contribution Plan shows that 81 percent of employees have money in their account, while 19 percent do not. The chart below goes on to show what percentage of employees changed their 401(k) asset allocations within a set period of time.
|
Changed Asset Allocation in 401(k) |
1 Qtr
2007 EE |
1 Qtr
2003 EE |
| Within the past month |
8% |
6% |
| Within the past 6 months |
22% |
21% |
| Within the past 12 months |
15% |
14% |
| Within the past 2 years |
10% |
13% |
| Have not made a change |
43% |
45% |
| Not Sure |
2% |
2% |
| N= |
N=716 |
N=903 |
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