Nine out of 10 full-time U.S. employees believe their boss
trusts them to get the job done, no matter where and when they work. But amid
this tech-aided flexibility, inefficiencies abound in the way workers use
technology and communicate, according to a study commissioned by Flex+Strategy
Group/Work+Life Fit and co-sponsored by Citrix.
Employees were evenly split between where they said they do
most of their work. One-third work remotely, 34% work in a cube or open-office
environment and 28% in a private office. Men continue to represent the majority
of teleworkers—60% in 2015—and the percentage of women increased significantly,
to 39%, from 29% in 2013.
Even while workplace patterns and work habits are changing,
the training and infrastructure to support flexible work arrangements is
lagging. Video or Web conferencing and project management technologies are increasingly
common, but used infrequently.
Nearly 60% of respondents say they frequently use email, Word
documents or spreadsheets to update colleagues about work progress and performance.
Slightly fewer (55%) meet in person and 43% use the phone. Generation Y (59%)
and Generation X (58%) were more likely than Baby Boomers (46%) to frequently
meet in person to keep others informed.
Those who work remotely were more likely to use the phone than
those who work in a cube or open office. Meanwhile, those onsite were more
likely to use email, Word documents or spreadsheets. Employees were
inconsistent in where they saved and stored work across company and personal
platforms.
Almost seven out 10 employees feel the increase in workplace
technology has made it easier to collaborate and communicate with colleagues,
and more than half of respondents said it has made it easier to work flexibly.
More than one in four (28%) said the increase in technology has created more
work, and the nearly one-fourth that noted this feels a “bit like Big Brother
is watching you,” with men significantly more likely than women to voice that
view.
In 2015, almost all full-time U.S. employees had some type of
work life flexibility, unchanged from 2013 and 2011. Most of that flexibility
is informal, with six out of 10 making occasional changes in how, when and
where they work, an increase from 2013. Employees feel increasingly positive
with a majority (56%) that noted their employer still has a strong commitment
to work/life flexibility.
Among other findings:
Eight out of 10 employees have never used project management
software and two-thirds have never used video/web conferencing.
Almost half (47%) received training or guidance to help
manage their work life flexibility in 2015, but more than half (52%) remained
on their own with no instruction.
Those who use flexibility informally received
less training than those with formal flexible work arrangements.
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It’s happened before and it will happen again—a hike in PBGC
premiums and shifting SOA mortality projections have materially raised the cost
of running a pension plan.
New research from national pension consulting firm NEPC
suggests increased lifespan projections from the Society of
Actuaries (SOA) and other economic pressures, such as the recent hike in Pension
Benefit Guaranty Corporation (PBGC) premiums, are seriously intensifying cost pressures on
defined benefit (DB) plan sponsors.
There was already a “critical need” for liability-driven
investing programs and cost-consciousness among DB plan sponsors before the
most recent SOA mortality tables and PBGC premiums came into effect, Brad
Smith, a partner in NEPC’s corporate services practice, tells PLANADVISER. From
vigorous activity in the pension de-risking and buyout
space to expanding interest in pension hibernation and other “bridge strategies,” Smith
says there is no shortage of evidence that pension plan sponsors are feeling
pinched. Add in recent news reports that the ongoing budget deal being hammered
out in Washington could lead to further PBGC premium hikes, and it all makes a
pretty grim picture for pension plan sponsors.
Looking over the
last year, Smith says the most impactful change highlighted in his firm’s 2015
Defined Benefit Plan Trends Survey “relates to the longevity improvements
released by the Society of Actuaries in their updated mortality table.” As
expected, he says improvements in longevity have had a significant negative
impact on plans’ funded status, with the number of defined benefit plans with a
funded status less than 80% increasing to 21% in 2015—up from just 9%
in 2014. Some of this is due to shaky market conditions, Smith says, but
the change in mortality tables is a more permanent and profound effect.
Also as expected,
a strong majority of survey respondents (69%)—predominantly large
and trendsetting pension plans—said the change in SOA mortality tables has “prompted
them to conduct a formal review of their hedging glide-path strategy.” Of those
that conducted a review, NEPC says, 39% chose to redefine their glide-path and
10% “re-risked” or otherwise revised their strategy to take into account the
updated assumptions.
NEXT: Running a DB often means ‘strained comfort’
According to NEPC
researchers, although the new mortality tables prompted significant evaluation
by plan sponsors, “a majority of respondents (52%) were comfortable with their
current strategy and decided not to make any adjustments to their current glide-path.”
NEPC says the
findings are particularly important for participants in the Baby Boomer
generation—who are likelier to be expecting a substantial private pension plan benefit
in addition to any Social Security and defined contribution (DC) plan assets. At
the plan level, it is actually employers with the youngest plan populations
that could see the most dramatic point-in-time funded status impact based on SOA mortality
projections—given the longer anticipated benefit payments lifespans of these plans.
As Smith observes, most industry practitioners and medical professionals alike
predict lifespans will continue to lengthen materially in the coming decades,
adding additional strain to the traditional DB system.
All of these
factors continue to paint a pretty compelling picture for pension buyouts and other
direct strategies to help sponsors keep control of potentially snowballing
costs, NEPC says. The research also suggests that, although a majority of plan
sponsors are hedging interest rate exposure using liability-driven investing
(LDI) strategies, many are also taking action to reduce the absolute size of
the sponsor’s pension liability by offering lump-sum distributions to a subset
of participants, generally terminated, vested participants.
Smith warns
sponsors to remember the Internal Revenue Service’s (IRS) new prohibition, announced in July, on certain lump-sum distributions for
beneficiaries currently in payout status. Of those surveyed, NEPC says 65% of
plan sponsors have offered lump-sum distributions, and 18% are planning to do so
in the future.
“Annuity
purchases are another option available to plan sponsors to reduce the absolute
size of the pension liability,” Smith says. “Although several high profile plan
sponsors have gone this route, 69% of plan respondents say an annuity purchase
is cost prohibitive at this time.”
NEXT: Rocky road ahead
“There’s no
silver bullet or one-size-fits-all solution to address the needs of plan
sponsors who still have their sights set on maintaining their corporate defined
benefit plans,” Smith concludes. “With an eye toward the obstacles that lay
ahead, we will continue to counsel clients aiming to maximize risk adjusted
returns while opportunistically de-risking their plans in the most
strategic and cost-efficient manner.”
It’s a sentiment
shared frequently with PLANADVISER—though not every interested party is as
diplomatic as NEPC. For example the ERISA Industry Committee (ERIC),
reacting to speculation that the Congressional budget deal being crafted in Washington
could involve provisions to further increase PGBC premiums as a tax revenue generator, says it “is outraged” at the proposal.
According to ERIC, the proposal being discussed by the Obama
Administration and top Congressional leaders would raise the fixed rate premium
from $64 in 2016—which was slated to be the final increase—to $68 for 2017, $73
for 2018, and $78 for 2019. The rate would then be indexed for inflation, ERIC
suggests, adding there are also “proposed changes to the variable rate premiums
of $30 per $1,000 of underfunding to $38 per $1,000 of underfunding in 2019.”
Annette Guarisco Fildes, president and CEO of ERIC, says the
group is “sounding the alarm that once again the employer-sponsored system is
being targeted for revenue,” adding that the premium increase is “just another
unnecessary burden on employers who sponsor defined benefit plans, giving them
more reasons to consider exit strategies.”
“Even the PBGC’s own analysis does not call for an increase
in premiums on single-employer defined benefit plans,” Guarisco Fildes adds. “PBGC
premium increases like the one announced today do nothing to encourage
single-employers to continue defined benefit plans or improve benefits for retirees;
in fact, the increases only work to further weaken the private retirement
system.”
NEXT: Up in arms
Michael Barry, president of the Plan Advisory Services
Group, is another industry practitioner who is clearly concerned with the
potential for Congress to step in over PBGC’s own leadership to raise premiums.
Barry lists the PBGC-related elements of the budget proposal as follows: “It
would increase PBGC flat-rate premiums (current 2016 rate: $64) to $68 in 2017,
$73 in 2018 and $78 in 2019 and PBGC variable-rate premiums (current 2016
rates: $30 per $1,000 of unfunded vested benefits, subject to a $500 per
participant cap) by $2 in 2017, $3 in 2018 and $3 in 2019. The proposal would
also allow sponsors some latitude in using plan-specific mortality tables (in
anticipation of likely IRS adoption of new tables in 2017 reflecting
significant mortality improvements) and extend current interest rate
stabilization relief.”
All of this serves only one purpose, Barry says, raising government
revenues. “It has nothing to do with retirement policy,” he warns. “We’ve had
round after round of premium increases, even though PBGC’s single-employer program
deficit continues to shrink. Evidence would indicate that PBGC’s underwriting
is completely out of whack—there was a $4 billion underwriting gain in 2014, a
$1.4 billion increase over the 2013 underwriting gain.
In written arguments shared with PLANADVISER, Barry
continues: “If someone would (please) take the time to study PBGC’s finances,
they would see that PBGC’s ‘deficit’ (itself a questionable index of PBGC’s
financial condition) is not, and for 10 years has not been, the product of
underwriting losses (that is, inadequate premiums vs. claims). The deficit is
the result of: (1) the failure of PBGC to hedge against declines in interest
rates (understandable—a lot of sponsors similarly wish they had hedged in
2000); and (2) a chaotic, incoherent and constantly changing investment policy.”
Barry concludes that the actual result of these premium
increases “is that premium revenue will go down, as sponsors bail out of the DB
system because of premium increases … But Congress is in love with raising
premiums because they count as revenues but don’t count as taxes. Which puts
them squarely in the bipartisan crosshairs. Is there a point at which something
becomes so ironic that it’s not even ironic anymore?”