Benefits September 17, 2004

Swedes Abusing Sick Leave

September 17, 2004 (PLANSPONSOR.com) - Swedish workers are abusing their sick leave system en masse, and the government is fed up.
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A survey released Friday by the National Social Insurance Board (NSIB) of Sweden showed that 40% of the population thinks it’s acceptable to skip work because they are feeling tired or are having trouble getting along with co-workers. Sixty-five percent felt they could take sick leave if they were feeling stressed at work. Seventy-one percent thought family problems entitled them to sometimes or always miss work.

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The government is in charge of the extensive welfare system that, among other things, covers sick leave, and the price of increasingly absent employees is taking its toll. Sick leave compensation tripled from $2 billion in 1997 to $6 billion in 2002. In response to the increasing levels of paid sick leave, the government plans to launch a large national campaign to inform people that only illness is a valid reason to miss work, according to the Associated Press.

The survey indicates “a deep lack of knowledge about what the health insurance is meant to cover,” NSIB director Anna Hedborg asserted, according to the AP.

Others looked at the situation in a more cynical light. “The insurance laws clearly state that inability to work because of illness” is the only valid reason to take sick leave, states Alf Eckerhall, a social insurance expert with the Confederation of Swedish Enterprise, according to the AP. “The key word is ‘inability to work’ – not ‘illness.'” He claims that Swedes are intentionally abusing a system. He cites the habit of leaving work early to call in sick, thus circumventing the fact that compensation for sick leave does not start until the second day of leave.

In , the employer pays for the first three weeks’ sick leave and workers can call in sick for seven days before needing a doctor’s certificate or medical proof. People who call in sick do not receive any compensation for the first day they are absent. But Eckerhall said many are abusing the current system by leaving work and calling in sick shortly before their work day is over. That then counts as one sick day, which lets them start receiving sick pay the next day.

“That means your day without compensation was 15 minutes long,” Eckerhall said, according to the report.

The poll was taken of 1,002 people from June 17-24.

Reader Responses September 16, 2004

SURVEY SAYS: What Does Your Retirement Plan Cost?

September 16, 2004 (PLANSPONSOR.com) - It's a complicated issue, but perhaps more complicated than it ought to be, and clearly a fiduciary's obligation is to consider the best interests of the plan's participants and beneficiary's, not just the package with the smallest price tag (though the two are not ALWAYS mutually exclusive).
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This week we asked readers to tell us – on a per-participant basis – what their defined contribution plan costs run.

As a subset question, I had asked for some idea of respondents’ program size – unfortunately, I wasn’t specific as to how I wanted that stated.   Consequently, I got assets, participants, and assets and participants – but not consistently enough to apply to this week’s results.   I can say, however, that while larger programs did tend to dominate the least expensive programs, some good sized programs were well-represented in the more expensive categories.   And, as some readers noted, by asking for a per-participant cost, even a larger program, where fees could be a very small percentage of asset values, might have a very large per-participant cost figure.   True enough – but I’ve always found that while the expression of fees in basis points is the “norm” today, the per-participant number provides an interesting alternative perspective.

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When it comes to that perspective, the most common response this week – and clearly we’ve got a lot of readers with their finger on the cost pulse – was more than $100/participant per year, cited by nearly 38% of this week’s respondents.   That’s right, and in a number of cases, WELL more than $100/year, “all in,” trust, recordkeeping, investment management, etc.     

One noted, “Our annual DC plan per head cost is currently an outrageous $170, and we are in the middle of an RFP trying to find a lower cost provider and better service (using the ever-so-helpful PlanSponsor articles and surveys, of course!)….I am presenting the results of the RFP to senior management tomorrow and this information will be helpful (well, unless everyone else comes back with a $5-$20 response!!!).”

“…it is over $500 per participant on an annual basis.   I think that your choices are extremely low,” said another.   “Did you really mean to include investment management costs?”   Or consider the perspective of the reader who said, “…the fees, without the participant paid internal fund management fees, are about $88 (f) per participant per year.   When you add in the fund fees (average slightly under 1% of assets), that number goes to $422.”

Another said, “We’re a very, very solid (g), our costs run over $100 per participant.   Don’t tell the owners.” 

There was, of course, a real diversity in responses.   The next most common response, cited by more than one in five respondents ( 22% ), was in the range of $35 to $50/participant per year.   However, at least one of these readers cautioned, “…but that is only a guess which really leads to h) no idea!”  Meanwhile, the third most common response, $5-20/participant per year, was cited by 10% .

Another 10% said their per capita fee was in the $50-$75 range, another 7% identified costs in the $75-$100/participant range (one of these cautioned, “Survey fees are going to be understated since many vendors hide their actual administration fees in various types of investment related fees.”) – and 2% – incredibly enough – reported costs of less than $5/participant per year (Section 457 plans appear to be especially fee efficient in this grouping, based on respondents that made a plan type identification).  

Not too surprisingly perhaps, roughly one in eight ( 12% ) said they had no idea (but several were heading off to check it out).

One reader noted, “Sounds like that article in the WSJ was written to drum up business for Consultants:-).   It should only take an hour or so to figure out what you are paying.”

But this week’s Editor’s Choice noted, “Despite my most diligent efforts, I never found out for sure how much our third party administrator made for handling our account…All that I know for sure is that every rock I tried to turn over was camouflaged and protected by a full armored division.”

Thanks to everyone who participated in our survey!

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