Benefits June 15, 2006

Employer Flexibility Seen as Tight Labor Market Response

June 15, 2006 (PLANSPONSOR.com) - Facing a tight labor market, Canadian employers are increasingly trying to find ways to attract and keep key talent, including offering flexible work schedules, according to a new survey.
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The Hewitt Associates poll found that Canadian companies of all sizes, in all parts of the country, and in all industries are finding their hiring tasks increasingly difficult and that more than half (52%) are hoping their willingness to be flexible with work hours and benefits will help deal with the problem.

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“Organizations are beginning to realize the need to convince older workers to stay on the job longer. At the same time, they want to convince Generation X and Y employees, those under age 40, to join them,” said John Tompkins, a principal in Hewitt’s Toronto benefits consulting group, in a news release. “With an employee population so diverse in terms of age, a ‘one size fits all’ approach is no longer effective. Employers who can identify and meet the different needs of their employees will be most successful in the current labor market.”

Hewitt’s survey revealed that three-quarters of the 232 organizations that responded are having problems attracting or retaining new employees. Forty-four percent are struggling with both attraction and retention. The problem is most severe in Alberta, where finding or keeping workers is an issue for 97% of respondents.

The problem is only expected to worsen, with half of the employees currently working at respondent organizations being baby boomers or older (age 40 or older). Employers indicated they anticipate close to 43% of their employees will take early retirement and less than 11% will work past age 65.

According to Hewitt’s survey, nearly 55% of organizations are expected to offer formal phased-retirement programs, in which older employees work fewer hours per week as they approach retirement, in 2009 compared with 26% currently. In addition, flexible arrangements such as job sharing, flexible hours, compressed work schedules, vacation buying and selling, and both paid and unpaid sabbaticals are all expected to increase in popularity over the next three years, according to the poll.

Benefits June 14, 2006

Survey: 403(b) Sponsors will Seek Outside Advice for New Regs

June 14, 2006 (PLANSPONSOR.com) - A new study from the Spectrem Group reveals that 403(b) plan sponsors would rather reduce the number of vendors they use for their plans than take on the additional work that will be required under proposed new regulations themselves.
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Sixty-three percent of plan sponsors surveyed said they would rather reduce the number of plan providers, while 37% said they will take on the additional work or costs caused by the new regulations, according to the Spectrem report.

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Under the proposed regulations, the Internal Revenue Service (IRS) wants all 403(b) plans to have written guidelines including product providers, loan provisions and other details – similar to those of 401(k) plans (See Report: Permanent 403(b) Regs Could be out by Summer ).

In spite of preferring not to take on the additional work/costs, 36% of sponsors said that they were extremely likely to keep their current program as is and handle the added administration and compliance work in-house. Fifty-seven percent reported they were not at all likely to use a single provider to handle the additional work or hire a third party administrator or benefit consultant.

When considering a plan provider to use, quality in service delivery (85%) and assistance in compliance with new regulations (90%) were rated the most important factors.

Overall, half of the respondents said they currently have a plan document that “defines all terms, including eligibility, benefits, applicable time limits and the like, as well as optional provisions such as hardship withdrawals, loans and the acceptance of rollovers into the plan,” the report said.

Those who say they do not have a plan document at present, cite a variety of sources they will seek assistance from to develop a document, including current plan providers (27%), the school district attorney (21%), a third-party administrator/TPA (17%), and a fee-paid outside consultant (12%).

The survey found that, overall, three-quarters of plan sponsors said they have received information from their current providers regarding the new regulations. The technical expertise in plan management in the K-12 market is currently low, with many plans being administered by a “business manager” for the school system. Only one-quarter of school districts said they currently use an outside consultant.

Three-quarters of respondents said that it is very or somewhat important to get advice from a source other than one of their current plan providers. Over half name the attorney serving the school district as the source they will turn to for advice in complying with any new regulations.

A total of 100 telephone interviews were conducted during May 2006 for the Spectrem Study. The sample was stratified to ensure representation across three size segments based on total student enrollment: 1,000-1,499 students, 2,500-9,999 students and 10,000 or more students.

A copy of the Spectrum report can be purchased via the firm’s Web site at www.spectrem.com .

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