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0604_MetLife CBR

March 30, 2006
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Related Topics: Benefit Design and Communication, Latest News
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Responsibility for Benefits Has Shifted

Over the last several years, companies have increasingly shifted the responsibility to their employees for choosing and financing more of their own benefits — such as health care, retirement and insurance-related products. Companies are turning to a mix of core, employer-paid benefits and an increasingly diverse portfolio of voluntary offerings, for which the employee pays all or most of the cost.

While employees' appetite for employee benefits offered through the workplace continues to grow, their confidence in making the right decisions for themselves and/or their families is on the decline. Only 38% of employees say they understand what benefits options best meet their needs, down from 40% in 2004, and only one-third of employees are confident in their ability to make the right financial decisions for their family.

With a wider range of benefits and coverage options, comes an increased need for benefits education and advice. MetLife believes that one of the most effective delivery mechanisms for that education is in the workplace. Since most people get their healthcare, retirement and insurance coverage at work, employee benefits are an obvious starting point to determine what insurance coverage they need to protect themselves and their families today, and what protection they may need in the future.

Doing Away with a One-Size-Fits-Most Approach

Until now, most of the benefits information and advice employees have been getting does not always enable them to feel comfortable enough to make informed benefits decisions. As a result, employees spend very little time selecting their benefits during their company’s open benefits enrollment, often spending only 30 minutes or less each year. As a result, many employees undervalue the significant investment that their employer makes in their medical insurance and other employee benefits.

While apathy on the part of employees certainly plays a role in their low comfort level about making the "right" employee benefits decisions for themselves and their families, employers also need to shoulder some of the blame. For one thing, benefits communication and education has historically taken a "one-size-fits-most" approach. However, as a company’s workforce becomes increasingly multicultural and multi-generational — with Echo Boomers, GenXers and Boomers working side-by-side — an attempt to speak with an entire workforce with the same generic messages may result in the employer "getting through" to very few of their employees.

Retirement education is one area where targeted benefits education is imperative. A 25-year-old, for example, will need to learn the basics of investing, while a pre-retiree (someone within five years of retirement) may need information on converting his or her nest egg into guaranteed lifelong income in retirement.

Life Stage Matters

MetLife’s research demonstrates that employees have different savings and protection needs at critical phases of their lives. A life-stage approach gives employees a framework for making the best choices for each phase of their lives. Life-stage benefits recognize that as employees age and experience major milestones in their life their financial and protection needs also changes.

"Employees experience many trigger events throughout their careers, they require education and tools at each major life stage to ensure that the information they are receiving is pertinent to them," notes Ben Colvin, vice president, Institutional Marketing at MetLife.

To increase employees’ understanding of — and appreciation for — their benefits program, employers need to prioritize their workers’ needs at each life stage and, then, tailor benefits communications and employee education materials to meet these diverse needs. Benefits plans — made available to a company’s entire workforce and then targeted to employees at various life stages — enable employers to help meet their employees’ expectations. They give employees the flexible choices they need and employers a cost-effective way to boost workplace satisfaction and loyalty.

"Steps can be taken to proactively remind employees about key trigger events — getting married, buying a home, having a child — which create a need to reevaluate insurance coverage and savings contributions. Open enrollment and benefits communication channels may also need to be customized based on life stage," Colvin added.

Despite employee desire for planning and advice, many employers do not see education/advice as a top priority. When asked about their most important benefits objectives, employers listed "controlling health/welfare benefits costs" (53%) as their number one priority. Only 14% identified "helping employees make better benefits decisions" as critically important.

Not surprisingly, only 28% of employers believe that their benefits communications programs effectively educate employees about benefits choices. And, more than two-thirds (67%) of employers believe their workers don’t understand the value/cost of the insurance benefits that they provide.

That sentiment may be changing. Among the largest companies MetLife surveyed, nearly half (44%) are interested in working with their insurance carriers to target benefits communications to employees based on demographics and/or life stage.

Employee Benefits as a Recruiting/Retention Tool

MetLife’s research shows that when employees understand their insurance, savings and retirement needs, they make better benefits decisions and have higher levels of benefits and job satisfaction.

By using this information to customize benefits programs, companies can better satisfy the needs of their employees, while boosting their ongoing recruitment and retention efforts.

With nearly one-quarter of all employees changing jobs over the past eighteen months — and three in four businesses expecting competition for talent to escalate over the next 18 months — "recruiting" and "retention" have once again emerged as top concerns for employers. In this increasingly competitive job market, the study’s findings point to the increasing importance of employee benefits as a recruiting/retention tool — and the growing need for workplace education and advice.

Nearly one-third (31%) of employees cite benefits as an important reason why they came to work for their employer, up from 25% in 2004 and 2003. Pre-retirees (44%) and Young Families with children under the age of six (41%) in particular see benefits as an important criterion in their job search and selection.

Benefits Satisfaction on the Rise

Overall, benefits satisfaction among workers is on the rise, with 39% of employees reporting that they are somewhat or very satisfied with their benefits packages, up from 36% in 2004 and 32% in 2003. The study demonstrates a correlation between job satisfaction, employee loyalty and benefits satisfaction. Among employees who are very satisfied with their current benefits packages, nearly two-thirds are also satisfied with their current job — and two-thirds feel a strong sense of loyalty to their employer.

The Takeaway

Clearly, employees' life stages play a significant role in how they perceive — and respond to — their benefits options. By using this information to customize benefits programs, wise companies can better satisfy the needs of their employees, while boosting their ongoing recruitment and retention efforts.

To get the new MetLife Study of Employee Benefits Trends, visit whymetlife.com/trends.

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