The economy is causing employees, particularly younger generations, to turn with greater interest to employers for help with establishing financial security. According to a new survey, nearly half of all employees say that because of the economy they are counting on employers’ benefits programs to help with their financial protection needs, and that percentage climbs to 55% for Gen X workers and 66% for Gen Y.
The majority of surveyed employers (60%) feel economic conditions are creating additional opportunities to leverage workplace benefits programs to achieve their objectives, and only about 10%, regardless of company size, say they plan to reduce benefits, according to MetLife’s 10th Annual Study of Employee Benefits Trends released Tuesday.
Among the employers that see additional opportunities to leverage their benefits programs, 91% feel strongly that benefits can be used to retain employees, 86% say that benefits can greatly increase employee productivity, and 80% feel that benefits can greatly help attract employees.
“Ten years ago, many baby boomers were planning to retire at age 65, Gen Y workers were just entering the workplace and communication vehicles like Facebook and Twitter didn’t exist. However, employers’ top benefits objectives have remained consistent, and the study highlights ways employers can evolve their strategies to cost-effectively attract and retain a talented and productive workforce,” says Anthony J. Nugent, executive vice president at MetLife.
Surprisingly, the study found that younger workers are more risk averse than older workers when it comes to their investments: 81% of Gen Y employees say they want guarantees that offer stable but somewhat lower returns compared to 76% of surveyed baby boomers. Perhaps fueling this conservative approach among the youngest workers is planning a retirement without Social Security benefits. Just 16% of employees believe that Social Security benefits will be available for Gen Y workers when they retire as they are for today’s eligible retirees, and just 24% of employees believe these benefits will be available for Gen X. Having enough money in retirement is a growing concern for younger workers. For instance, in 2003 one-third (33%) of employees ages 21 to 30 were very concerned about running out of money in retirement. Now more than half (52%) of that age group are very concerned.
“Despite continuing to contribute towards Social Security, approximately four out of five younger workers believe the amount of money they can expect to receive from Social Security will be significantly reduced relative to today’s recipients. Gen Y and Gen X recognize that they will be shouldering more of the responsibility for their long-term security but are looking to employers for help even if they have to pay for some of these benefits themselves,” says Dr. Ronald S. Leopold, vice president at MetLife.
The study also showed that the past several years have eroded retirement savings, and the percentage of employees who have fallen behind schedule in their progress towards retirement savings has increased from 45% in 2004 to 50% in 2011. More than one-third of surveyed baby boomers (35%) say that as a result of economic conditions they plan to postpone their retirement.
While employers seemed to understand how items like salary and wages, advancement opportunities and company culture influence employees’ feelings of loyalty, they continue to underestimate the power of leveraging their benefits programs. For example, while 66% of surveyed employees say that health benefits are an important driver of their loyalty, only 57% of employers believed so. The divide widens when it comes to retirement and non-medical benefits. For instance, 59% of employees said retirement benefits are very important for influencing their feeling of loyalty toward their employer, but only 42% of employers realized this, and 51% of employees said the same for non-medical benefits like dental, disability, and life insurance, while only 32% of employers thought so.
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