Middle-market executives believe only 3% of employees fully understand the cost of their retirement plan according to the Verisight and McGladrey 2011/2012 Compensation, Retirement and Benefits Trends Survey.
Further confusion exists around fiduciary standards. Eighty-seven percent of employers use an external or third-party investment adviser, but one-third (34%) are unsure what their adviser’s fiduciary responsibility means and 27% work with advisers that are not fiduciaries.
The survey also found when deciding what is most important in evaluating a retirement offering:
- Fifty-nine percent consider the costs of investments and also quality and level of service,
- Thirty-two percent care about the reputation of the provider, and
- Twenty-four percent care about the availability of specific investment options.
Sixty-five percent of middle-market executives say benefits costs are the leading factor impacting compensation decisions.
This compares to 4% of survey respondents who say economic conditions/financial performance is the leading factor, according to the Verisight and McGladrey 2011/2012 Compensation, Retirement and Benefits Trends Survey.
When evaluating compensation decisions, employers also take the following into account:
- Challenge of retaining key employees (52%),
- Desire to incent employee performance (48%), and
- Challenge of attracting talent (43%).
Despite economic conditions, employers remained quite generous in 2011 even as they sought measures to further reduce associated costs. Only:
- Thirty-five percent reduced overtime pay,
- Twenty-five percent cut staff,
- Twenty-four percent increased employee share of health/welfare costs,
- Eighteen percent instituted a hiring freeze, and
- Eleven percent reduced/suspended 401(k) retirement plan matching contributions.
In the next 12 months, cost control strategies will stay top of mind for middle-market executives. However, measures will focus more on increasing employees' share of health/welfare costs (37%) than tactics that have already been widely pursued. Only 6% are considering reducing/suspending 401(k) matches, 11% will institute a hiring freeze and 11% are considering staff reductions. Compared to 2011, the middle-market will also lower their emphasis on overtime reduction (15% compared to 35%).
Conducted online in September-October 2011, the survey polled more than 850 organizations drawn from a national sample. The majority of participants were mid-sized, private and non-profit companies. Survey participants reflected a wide range of industry types including manufacturing, healthcare, real estate/construction, finance/banking, distribution and services industries.