The latest Mercer Workplace Survey finds that the perceived value of employee benefits among workers who participate in their company’s health and retirement benefits is starting to erode — especially among the younger generation. Workers under the age of 50 who say their benefits are “definitely worth it” in terms of what they pay out of pocket has “dropped precipitously” in two years from 45 percent to 30 percent, according to Mercer.
The survey, which is based on input from 1,506 employees enrolled in their companies’ health and retirement benefits, finds that benefits are still critically important: 93 percent agree with the statement “My health benefits are as important as my salary” while 86 percent disagree with the statement “My benefits don’t matter much to me.”
These rising levels of discontent can at least be partly attributed to cost-shifting by employers, says Mercer’s Beth Umland:
Out-of-pocket expenses for employees are likely to continue to rise. We’re seeing more cost-shifting and rapid growth in high-deductible consumer-directed health plans as employers are asked to cover more employees under health reform.”
Employees are also undoubtedly peeved about cutbacks in 401(k) matches and delayed matches by many companies. Although AOL has reversed its decision to delay its 401(k) match (CEO Tim Armstrong had originally said the delay was needed to compensate for the cost of “distressed babies,” among other things), other large firms like JPMorgan Chase, Oracle and Caesars Entertainment have reduced or delayed payment of their 401(k) matches and lengthened vesting schedules for their DC plans, according to an analysis of hundreds of government filings by Bloomberg News.
IBM shifted last year to a lump-sum payment of its 401(k) match, similar to what AOL originally did. Oracle stretches out the vesting schedule for its DC plan participants: employees are 25-percent vested after their first year of employment, another 25 percent vested after a second year and fully vested after four years with the company, according to Bloomberg.
These measures can make it much harder for employees to save enough for retirement, Brigitte Madrian, a Harvard professor who studies retirement policy, told Bloomberg:
There’s been an implicit contract for years and years — workers save and companies match — but now they’re changing the rules. Most individuals can’t do it on their own. We’re going in the wrong direction.”
The Mercer findings directly contradict a new survey from Guardian Life Insurance Co. which finds workers value their benefits plans more than they did two years ago.
Guardian says this increase in perceived value “suggests that American workers are valuing their benefit packages more than ever and reaffirms the value of workplace benefits for employers’ business strategy, especially for retaining employees.”