Seventy-three percent of U.S. employees across all age groups would like the ability to customize their workplace benefits to suit their individual needs, according to a LIMRA Secure Retirement study.
Michael Ericson, LIMRA Secure Retirement Institute analyst, says, “With four generations in the workplace, designing an attractive benefits package for all employees is challenging. As a result, employers are considering offering their employees the ability to control how they allocate their allotted money across their benefits.” This strategy, often called ‘benefits wallet,’ gives each employee a certain amount of money annually to allocate toward the benefits they want.
The LIMRA Secure Retirement Institute study, “Employee Benefits Face Off: Worker Positioning of Retirement Plans in a Benefits Wallet,” found employees ranked health care coverage, retirement savings accounts and vacation as the three most popular workplace benefits. Nearly 90% of workers ranked health care coverage and retirement savings plans in their top five most important benefits.
A worker’s life stage also influences the types of benefits most valued by the employee. Millennial workers favor education benefits and paid parental leave. These benefits reflect their life stage as well as the substantial amounts of student loan debt they hold. Generation X workers ranked financial planning/wellness programs higher than Millennials and Baby Boomers. This is the first generation relying primarily on a defined contribution (DC) plan to fund their retirement and have many competing financial priorities, making access to financial advice essential. Baby Boomers ranked disability insurance significantly higher than Millennials and Gen Xers. This benefit typically gains importance to workers as they age and the likelihood of becoming disabled increases.
The study found that only half of workers are satisfied with their current employer benefits. Married workers are more satisfied than non-married workers (55% vs. 45%) and workers who use a financial adviser are more likely to be satisfied with their benefits (62% vs. 46%).
According to the Institute’s findings, employees with higher household incomes were more likely to be satisfied with their benefits. Lower-income workers are less likely to be full-time employees and are less likely to have generous benefits available to them. In addition, more than half of workers (54%) agree that their non-salary benefits play a large role in their financial security. Men were more likely to say this than women; and older employees were more likely to value benefits over salary.
“As competition for top employees increases and benefits resources tightens, employers will have to ensure their benefits program is balanced and competitive,” says Ericson. But, he warns, “While offering a benefits wallet approach might seem the easiest way to accommodate the different needs of employees, it may have the unintended consequence of weakening established retirement savings programs like auto-features and employer-matching contributions that promote retirement savings.”