What’s Ahead in 2008 Concerning Employee Benefits
6. 401(k) retirement plans. There are indications that most Americans underestimate the financial resources necessary to maintain the lifestyle they expect to enjoy in retirement, yet many employees fail to enroll in 401(k) plans, even when employers match their contributions. Hewitt Associates found that only 31 percent of eligible workers ages 18 to 25 have caught 401(k) fever and are taking advantage of employer matches, while 63 percent of those 26 to 41 years old are enrolled, and 72 percent of Boomers. More employers are using “automatic enrollment” with new hires in an effort to help employees get started saving for retirement. Clearly, more employee education is needed, particularly among younger workers who say that they can’t afford to put money into a 401(k) plan. They need to be shown that the program is tax-advantaged, so their net take-home pay may not be affected. An employer’s match could be an additional incentive.
7. Voluntary benefits. Why are some employers skeptical about offering voluntary benefits to their workers, particularly when the employees bear the full cost? Some executives find it difficult to believe that their employees will actually sign up for products such as disability income coverage, cancer insurance, accident plans and critical care.
However, as the need to take responsibility for one’s financial situation has grown over the past decade, employees are far more interested in protecting themselves and their families.
Disability income is attractive since many employees live paycheck-to-paycheck. Now, workers are asking for critical care insurance that provides a lump sum payment when the policyholder has been diagnosed with cancer, Alzheimer’s disease, heart attack and stroke, as well as other conditions, depending on the particular policy.
The money can be used as the policy holder decides. Since these are group plans, they are more inclusive, the cost is low and the underwriting is minimal. Most importantly, they give employees choices and offer peace of mind.