Employee Benefits Important Cog, Even During the Pandemic – National Association of Plan Advisors

Corona%20woman%20at%20deskEmployers have been navigating a public health crisis, financial woes and difficult business decisions, but retirement and other employee benefits remain important for business, a new study suggests. 

According to Navigating the Pandemic: A Survey of U.S. Employers by the Transamerica Institute and its Transamerica Center for Retirement Studies (TCRS), 70% of employers report that they have been negatively impacted by the coronavirus pandemic and more than half (54%) have implemented cost-cutting measures that affected their employees. 

However, employers also recognize the importance of compensation and benefits to attract and retain employees, while providing their employees with the ability to save for retirement and protect their health and financial well-being. According to the findings, 63% cite salary/pay as being very important, while 60% (net) cite employee benefits including health insurance (47%), retirement benefits (36%) and/or other benefits (25%).

Not surprisingly, large and medium companies (both 86%) are significantly more likely than small companies (54%) to cite employee benefits as being very important, while small companies (61%) are more likely than medium (50%) and large companies (52%) to cite flexible work schedules as very important.

The survey also found that nearly all employers (90%) implemented one or more types of support for their employees during the pandemic. This included flexible work hours (59%), the ability to work remotely (53%), and safety measures for on-site workers (43%). Large and medium companies were again more likely to provide various types of support to their employees than small companies. 

The findings are based on a survey of more than 1,900 employers conducted in late 2020, asking them what their companies are doing differently amid the pandemic to support their employees’ health, financial security and well-being. Small companies are defined as those with less than 100 employees, while medium size ranges from 100 to 499 employees, and large for-profit companies include those with 500 or more employees.

Employee Benefits

As the economy recovers and employers envision their post-pandemic workplaces, the study suggests that employers should consider consulting with HR professionals and employee benefits advisors to identify new opportunities that can enhance their business practices and benefits offerings.  

While larger companies are more likely to have robust benefits than small companies, TCRS believes there is ample room for growth among companies of all sizes. According to the findings:

Retirement benefits. Fifty-two percent of employers offer a 401(k) or similar employee-funded retirement plan to their employees. These plans are much more commonly offered by large (90%) and medium companies (83%), compared with fewer than half of small companies (44%) that do so.

Among companies that do not offer a 401(k) or similar plan, only 37% say they are likely to begin sponsoring a plan in the next two years. The most frequently cited reasons among companies not planning to do so include they are not big enough (74%), they are concerned about cost (35%), or they believe their employees are not interested (11%). 

However, there may be cause for optimism, as 30% of those not likely to offer a plan say they would consider joining a multiple employer plan (MEP) or pooled employer plan (PEP).  

Part-time eligibility. Among employers that offer a 401(k) or similar retirement plan to their employees, only 51% extend eligibility to part-time workers. Large (64%) and medium companies (51%) are somewhat more likely to extend eligibility to part-time workers than small companies (46%).

Among plan sponsors that do not extend eligibility, 39% do not plan to do so in the future. Their most frequently cited reasons include generally impractical (43%), high turnover rates among part-time employees (39%) and concern about cost (37%). The study notes that the SECURE Act requires plan sponsors to extend eligibility to long-term (three years), part-time workers, and employers are required to track years of service beginning in 2021. 

Phased retirement. Nearly 7 in 10 (69%) employers do not offer a formal phased retirement program, including 33% that plan to implement a program in the future and 36% that do not have plans to do so. Again, large (66%) and medium companies (49%) are more likely to offer such programs than small companies (19%). 

The most frequently cited reasons for not offering a phased program are that employees are not interested (39%), it is easier to address employees’ requests on a case-by-case basis (34%), and operational and administrative complexity (23%). Additionally, large companies (45%) are more likely to cite concerns about age- and employment-related discrimination laws as a reason for not offering phased retirement, compared with medium (28%) and small companies (10%).

“Employers play a vital societal role by providing employment, employee benefits, and the ability for workers to save and invest for a secure retirement,” notes Catherine Collinson, CEO and president of Transamerica Institute and TCRS. “Especially now, as our nation emerges from the pandemic, employers need support from policymakers to continue paving the way for their recovery and to make it as easy as possible to modernize their business practices and expand their benefits offerings.” 

The findings are based on a 25-minute, online survey conducted from Nov. 18 to Dec. 20, 2020, by the Harris Poll on behalf of the Transamerica Institute among a nationally representative sample of 1,903 business executives with specific titles who make decisions about employee benefits at their company.