Benefits June 15, 2005

Many Canadian Employers not on top of Absenteeism Problems

June 15, 2005 (PLANSPONSOR.com) - Most Canadian employers are not ready to address problems with work-related injuries or personal illness, despite increasing employee absenteeism and the costs associated with it.
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That was a key conclusion of a new Hewitt Associates survey, according to a Hewitt news release. Responding firms estimated that the average direct cost per employee for all disability-related absences per year is $1,933 for union employees and $1,579 for non-union employees – costs that could ultimately prove substantial at a large employer, according to Hewitt.

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“Some organizations estimate these figures could double if indirect costs such as administrative and replacement costs were included,” said Rochelle Morandini, Hewitt’s senior organizational health consultant, in the news release. “These numbers also don’t account for absence days that are often missed or are simply not tracked, or for lost productivity time when people remain at work while coping with injury or illness. Absenteeism c learly impacts a company’s bottom line, but without the necessary data, an organization can’t truly know how big that impact can be.”

Hewitt’s survey revealed that many companies struggle with tracking absenteeism, with 81% of respondents saying they would have difficulty producing five years of data related to disability absences. Thirty-eight percent of organizations attributed this to a lack of available resources, including technology (85%), people (70%) and data (47%), Hewitt said.

“It is extremely difficult to manage what you are not currently measuring,” said Morandini. “Senior leadership should be concerned about the fact that this large cost drain is not being fully identified and measured.”

Copies of the survey report are available from Hewitt by calling (416) 225-5001 or by e-mail at infocan@hewitt.com .

Compliance June 14, 2005

US Senators Demand PBGC Underfunding Data

June 14, 2005 (PLANSPONSOR.com) - Two key US Senators have asked the Pension Benefit Guaranty Corporation (PBGC) for more information about hundreds of underfunded pension plans, which the lawmakers say they need to help craft pension reform measures.
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>Senator Charles Grassley (R-Iowa) and Senator Max Baucus (D-Montana), chairman and ranking minority member respectively of the Senate Finance Committee, said they are seeking more information about the health of defined benefit plans as reported to the PBGC in 2003 and 2004, according to a Reuters report. The PBGC insures the nation’s private-sector pension plans.

“You can’t fix a problem until you understand it,” Grassley said in the joint statement with Baucus, according to Reuters. “Unfortunately, we often don’t hear about a pension fund’s collapse until it’s too late…. Getting information about the companies with the worst problems will inform our work.”

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>US House Education and Workforce Committee Chairman Representative John Boehner (R-Ohio) and the panel’s ranking Democrat, Representative George Miller ofCalifornia, made a similar request of the PBGC in April. They asked for information about pension plans that are 75% funded or less.

>Boehner introduced a pension reform plan in the House last week requiring companies to fully fund their pensions in seven years and pay higher insurance premiums to the PBGC, which has a $23.3 billion deficit (See    Latest GOP Pension Reform Bill Includes Advice ).

>Miller said last week that when he reviewed the confidential data from the PBGC about underfunded pensions, it was dramatic compared to statements companies make about their pensions in annual reports to the Securities and Exchange Commission (SEC). Some companies, Miller said, were making public reports that were “billions of dollars” more optimistic about the pension funds than their confidential reports to the PBGC.

>The PBGC’s Director Bradley Belt testified last week that in 2004, there were 1,108 pension plans that were underfunded by $353.7 billion, a 27% increase over the previous year (See    PBGC: Underfunding Totals Skyrocket 27% in 2004 ). The auto sector accounted for at least $55 billion of plan underfunding and airlines more than $30 billion, Belt said.

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