To use a bad pun, many of the “benefits” of employment, beyond the obvious receipt of a paycheck, are the “employee benefits” offered by employers. Benefits are a key part of the relationship between employers and employees, and those benefits often contribute significantly to a household’s overall financial security and health.
Helping employers — and employees — navigate and make best use of employee benefits is a key function of both advisors and the companies that offer those benefits. Understanding the role those benefits play for each “customer” (employers and workers) is critical to adding value and helping craft a successful offering.
The LIMRA Secure Retirement Institute recently looked at both employee and employer perceptions of benefits offerings in its new report titled “A Matter of Opinion: Employer and Employee Perceptions of Benefits Priorities and Strategies.” (To be clear, and in light of my own role in institutional retirement research, the employers we spoke to were those who already offered a defined contribution plan.) When talking to employers, we asked them about how important they felt that these benefits were to their employees, instead of to their own organizations.
The Top 5 List
Retirement and health benefits remain a top priority. Health trumps retirement as the No. 1 benefit, but they are equally included in employer and employee top five benefits lists (for nine in 10 employers and workers).
In the top five list, retirement and health benefits are followed by paid vacation time (about eight in 10) and life insurance (about six in 10), where employers and employees are in similar agreement about the importance of these benefits.
Rounding out the top five for both groups is disability insurance, where we see a little less synchronicity between employers and employees. Fifty-eight percent of employers said it’s a top benefit for employees, but only 47 percent of employees agree.
Employees, especially younger ones, may not have had the opportunity to see disability insurance in action (and this is a good thing) or truly understand how it works. Disability insurance is much more important to older workers. Sixty percent of people older than 50 said it is a top benefit, compared to nearly half of people ages 40-49. Only 34 percent of those ages 20-39 said that disability insurance is on top of their list.
Paid parental leave is another area where, in total, employers and workers don’t connect about how important a benefit is — but again, age very much comes into play. Although 40 percent of employers said it’s a top five benefit, only 28 percent of employees overall felt the same. Here, though, employers are right in line with their youngest employees; 40 percent of each felt it’s a top five benefit. It’s no surprise that very few workers ages 50 and older felt the same (only 11 percent).
Employees Warm To Wellness Programs
Wellness programs — both financial and physical — are a little more important to employees than employers appreciate; financial wellness is top five ranked for 35 percent of workers vs. 31 percent of employers, and physical wellness for 27 percent of workers vs. 20 percent of employers. About a third of each (34 percent of employees, 37 percent of employers) said that education funding support of some kind makes the top five list.
A relatively new benefit on the market, an emergency savings (rainy day fund) benefit, is of great interest to employers; 89 percent are interested in offering one. A somewhat smaller percentage of employees — but still, 61 percent — are interested in using one. Three-quarters of millennials said they would use this benefit, compared with only 42 percent of baby boomers.
Are employees satisfied with their benefits? About half — 52 percent — said they are, which certainly leaves room for improvement. Employers overestimate their employees’ satisfaction, with 78 percent reporting that their employees are satisfied.
This suggests that there’s room for advisors and benefits providers to add real value to benefits programs and efforts. Understanding employee perceptions and needs — and addressing gaps with products, education, communication, enrollment support and other engagement tools — can be a real differentiator with employer clients who struggle to balance benefits, resources, dollars and employee needs.