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2nd Quarter 2007 Executive
Summaries
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| by Deb Hart and Mark Arian, Towers Perrin |
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If employers want to move employees beyond superficial acceptance of benefit changes, organizations need to increase the focus on how they manage the change process and support employee decision making. This article describes how employers can help workers understand changes and, through effective change management and communication, successfully navigate in an evolving benefits world. Using recent survey research about large employer and employee attitudes, the authors demonstrate tangible proof that these efforts pay off, both in financial and cultural terms.
What Keeps Human Resource Professionals Awake at Night?
| by Patricia Wiley, Ernst & Young |
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The topic of employees taking responsibility for their own benefits planning can be exasperating to human resource professionals and employers. But make no mistake: The topic is a vital one for employees and employers alike. Based on the experiences of financial counselors that provide independent financial counseling to more than two million employees of large organizations, this article presents the top ten mistakes employees make and suggests how human resource professionals can help employees avoid those mistakes.
Personal Responsibility in Health Benefits: Looking Backward, Looking Forward
| by Alexander “Sander” Domaszewicz, Mercer Human Resource Consulting |
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Consumerism and care management continue to make inroads as cost-containment strategies for employers, as well as for employees who have endured the steady rise in benefit cost-shifting. The latest statistics and trends point the way to a new era of personal responsibility in health benefits. The author describes how this trend has grown, and where it is leading.
Building a Culture of Personal Benefits Responsibility
| by Andy Hiles, Barbara Hogg, Andrés Tapia and Jim Winkler, Hewitt Associates |
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Successfully having employees take personal responsibility for their benefits plans requires going beyond the rapid rollout of new benefit plan designs; it requires employers to invest in understanding the complexity of their workforce. This article reviews the evolution of benefit plans and what has arisen as the current state of employee benefits. It then discusses steps employers can take to build a successful total benefit strategy that recognizes the importance of the emerging workforce's racial, ethnic and cultural diversity.
Communicating the New Benefits Deal
| by Lisa Patten, PricewaterhouseCoopers |
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Communication is critical to changing employees' attitudes toward increased responsibility for benefit decisions and health and wellness. As employers shift responsibility, they not only must provide the right decision-making tools; employers must also maintain a safety net for those who don't want the responsibility. This article discusses the experience of four organizations that implemented the “new deal” of increased employee responsibility while also balancing employee needs.
| by Dan Campbell and Ken Mungan, Milliman |
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A recent convergence of new, analytical rigor and computational power allows sophisticated risk-management techniques to be applied even to relatively small accounts, such as those held by 401(k) participants. The result is a startling new option—the 401(k) guarantee—a guaranteed withdrawal balance that will alleviate the risk of retirement account losses due to market declines and ensure against the possibility of outliving one's retirement savings. This article examines the first generation of the 401(k) guarantee and describes how it will provide the “security net” lacked by 401(k)s and other retirement savings vehicles.
The New Investment Advice Provisions of the Pension Protection Act: The Question for Plan Sponsors
| by William J. Arnone and Lynn P. Finkelstein, Ernst & Young |
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Forthcoming Department of Labor regulations should clarify many open questions about the implementation and impact of the investment advice provisions contained in the Pension Protection Act of 2006 (PPA). Once these issues are resolved, it is very likely that investment advice will soon be a standard component of 401(k) plans. This article describes employers' new roles and responsibilities and suggests steps that plan sponsors should consider taking when deciding whether and how to offer investment advice to 401(k) plan participants.
Recent Developments in Life Annuity Markets and Products
| by Mark J. Warshawsky, Watson Wyatt Worldwide |
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Immediate fixed life annuities can play an important role in the distributions from defined contribution plans, to reduce the risk of outliving assets during retirement. Lifetime payouts from these traditional commercial products, however, are quite volatile, reflecting trends and changes in interest rates. New products deal with some drawbacks in fixed annuities at the cost, however, of extra charges, complexity and risks. One proposed product—integrating the life annuity and long-term care insurance—would address the adverse selection problem of immediate annuities. Analysis, both for purposes of retirement plan design and public policy development, needs to consider these market conditions and trends, developments and issues.
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