PLANSPONSOR - September 2017 - 44
TOTAL BENEFITS
Allocating Benefit Dollars
Finding a balance when funding health and retirement plans
E
mployers' total cost for the benefits
they provide-health care, retirement
and post-retirement medical-rose
from 14.8% of pay in 2001 to
18.3% in 2015, a jump of 24%, according to
the " Shifts in Benefit Allocations Among
U.S. Employers " analysis by Willis Towers
Watson. During that period, employer
health care costs for active employees
more than doubled, rising from 5.7% to
11.5% of pay. Conversely, according to the
study, employer costs for total retirement
benefits, which include defined benefit
(DB), defined contribution (DC) and postretirement
medical plans (PRM), declined
by 25%, from 9.1% to 6.8% of pay.
These trends reflect a seismic shift
in the allocation of benefit dollars, the
study says. In 2001, active health care
benefits comprised about two-fifths
(42%) of costs, while retirement benefits
made up the remaining three-fifths
(58%). By 2015, the ratio had flipped, with
active health care benefits accounting for
almost two-thirds of costs (64%) and the
retirement share dropping to just a little
over one-third (37%).
However, as more employees worry
about having enough saved for retirement,
and many still feel the financial impact of
the 2008/2009 recession, an increasing
number want education and advice about
retirement planning. The same Willis
Towers Watson analysis found roughly
two out of three would trade a portion of
their salary for more generous and guaranteed
retirement benefits, while only
around one-third would make the same
trade for more generous health benefits or
lower, more predictable costs when using
health care services.
Kim Buckey, vice president of client
services at DirectPath, specialists in
improving participant engagement, in
Birmingham, Alabama, says it is not
44 PLANSPONSOR.com September 2017 Art by Pete Ryan
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PLANSPONSOR - September 2017
Table of Contents for the Digital Edition of PLANSPONSOR - September 2017
Harvesting the Right Facts and Figures
2017 target-Date Fund Buyer's Guide
Allocating Benefit Dollars
Keeping Money in the Plan
Strategic Timing
Rothification of DC Plans
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PLANSPONSOR - September 2017 - Harvesting the Right Facts and Figures
PLANSPONSOR - September 2017 - 27
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PLANSPONSOR - September 2017 - 2017 target-Date Fund Buyer's Guide
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PLANSPONSOR - September 2017 - Allocating Benefit Dollars
PLANSPONSOR - September 2017 - 45
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PLANSPONSOR - September 2017 - Keeping Money in the Plan
PLANSPONSOR - September 2017 - 48
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PLANSPONSOR - September 2017 - Strategic Timing
PLANSPONSOR - September 2017 - 51
PLANSPONSOR - September 2017 - Rothification of DC Plans
PLANSPONSOR - September 2017 - 53
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