Products September 8, 2011

ING Offers Tools and Guidance to Public Employers

September 8, 2011 (PLANSPONSOR.com) - As attention over public sector budgets and employee benefits programs continues to grow, ING’s U.S. Retirement division announced the publication of Public Pensions in Focus, a new suite of research and support tools for state and local government employers.
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The materials, developed by the ING Retirement Research Institute, include a whitepaper and a checklist that public sector employers can leverage when making important decisions about their retirement systems, including their defined benefit pension programs. The goal is to provide sponsors with an objective and well-informed approach to analyzing their existing systems, the needs of their employees, and the options that are available if a change is in order.  

“Many government employers are looking very closely at their retirement systems to make sure they can meet their short-term and long-term goals for funding retiree benefits,” said Brian Comer, President of Public Markets for ING Retirement, in the announcement. “We believe that each public employer must make an informed decision based on their unique situation. Some will find they need to significantly restructure their plans, while others will be fine and not require a change. We are seeing examples of both cases play out in the market. No matter what the outcome, it is crucial to approach each situation with a systematic and documentable process.”  

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In addition to providing an overview of the issues and opportunities facing the U.S. public retirement system, the whitepaper offers government plan sponsors actionable direction by walking them through the following steps: 

  • Pre-planning: Pre-planning helps plan sponsors lay the groundwork for a retirement program analysis and involves identifying relevant information about various stakeholders in the retirement program. 
  • Situation Analysis: With pre-planning documentation serving as a guide and framework, the situation analysis calls for an objective analysis of the current retirement program and its future viability. 
  • Choosing a Strategy: Decisions about the appropriate solutions require an assessment of all available features and options, such as costs; benefits and risks; ability to meet stated organizational goals; impact on stakeholders; and potential obstacles and benefits. 
  • Implementation: If change is required, it is imperative to create detailed communications and implementation plans that clearly identify such things as team members and responsibilities; key dates and events; contractual, legislative and legal factors; and performance metrics and feedback mechanisms. 

As part of the process, ING’s Public Pensions in Focus checklist helps walk a sponsor through all the key steps before undertaking any large scale changes. Completing the checklist provides a structure for approaching any discussion about redesigning a program.  

To access Public Pensions in Focus, or other ING research, visit the ING Retirement Research Institute at http://www.ingretirementresearch.com, and select the “publications” page.
Benefits September 8, 2011

BLS Releases Comp Cost Data for June

September 8, 2011 (PLANSPONSOR.com) – Private industry employers spent an average of $28.13 per hour worked for employee compensation in June 2011, according to the U.S. Department of Labor's Bureau of Labor Statistics.
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Wages and salaries averaged $19.81 per hour worked and accounted for 70.4% of these costs, while benefits averaged $8.32 and accounted for the remaining 29.6%. Total compensation costs for state and local government workers averaged $40.40 per hour worked in June 2011. Total compensation costs for civilian workers, which include private industry and state local government workers, averaged $29.98 per hour worked in June 2011. 

The average costs in private industry for retirement savings benefits were $1.03 per hour worked, or 3.7% of total compensation. Costs varied by occupational group. Private industry retirement and savings benefit costs for management, professional, and related occupations were $2.08 per hour, or 4.1% of total compensation in June 2011. Costs were lowest among service occupations, 22 cents or 1.6% of total compensation. Included in this amount were employer costs for defined benefit and defined contribution plans.  

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In June, the average cost per hour worked for defined benefit plans was 46 cents (1.6% of total compensation). The average cost for defined contribution plans was 57 cents (2% of total compensation).  

Retirement and savings costs were higher, both in amount and as a proportion of total compensation, for union workers ($2.92 and 7.7% of total compensation) than for nonunion workers (83 cents and 3.1% of total compensation). Defined benefit plan costs were significantly higher for union workers ($2.22 and 5.8% of compensation) than for nonunion workers (28 cents and 1% of compensation). Defined contribution costs for union workers were higher (71 cents) compared to nonunion workers (55 cents), but the proportion of total compensation was similar.  

Retirement and savings costs were higher per hour worked in goods-producing industries ($1.70 and 5.1% of total compensation) than in service-providing industries (89 cents and 3.3% of total compensation). Within goods-producing industries, retirement and savings costs averaged $1.71 per hour in construction and $1.57 per hour in manufacturing. Costs in service-providing industries varied widely, ranging from 12 cents in leisure and hospitality to $1.69 in the financial activities industry.  

Retirement and savings costs increased, both in cost per hour worked and proportion of total compensation, with establishment size. Establishments with fewer than 100 workers averaged 61 cents (2.6% of total compensation). Establishments with 100 to 499 workers averaged $1.03 per hour (3.6 percent) worked, significantly less than establishments with 500 workers or more, which averaged $2.18 (5.4% ). Defined benefit costs ranged from 23 cents per hour worked for establishments with under 100 workers to $1.14 per hour worked for 500 workers or more. Defined contribution costs also showed increases by establishment size from 38 cents per hour worked for 1 to 99 workers to $1.04 per hour worked for 500 workers or more.  

Full-time workers in private industry averaged $1.30 per hour worked (4% of total compensation) for retirement and savings, significantly higher than 26 cents for part-time workers (1.6%). 

Private industry employer costs for paid leave (vacation, holiday, sick leave, and personal leave) averaged $1.90 per hour worked (6.7% of total compensation), supplemental pay (overtime and premium, shift differentials, and nonproduction bonuses) averaged 80 cents (2.8%), insurance benefits (life, health, and disability insurance) averaged $2.27 (8.1%), and legally required benefits (Social Security, Medicare, unemployment insurance, and workers’ compensation) averaged $2.33 (8.3%).  

View the entire report at http://www.bls.gov/news.release/pdf/ecec.pdf. 

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