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willistowerswatson.com
Overall Shifts in United States Employer Benefit Costs
IABA Annual Meeting
July 28, 2017
Washington, DC
© 2017 Willis Towers Watson. All rights reserved.
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How can employers better deliver the benefits their employees want?
Shifts in benefit allocations among
U.S. employers
2© 2017 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.
–
All employers 2001-2015
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Shifts in Employer Benefit Costs
Highlights
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03 Overall Benefits Costs
Overall employer
benefit costs rise
relative to pay – up
3.5 percentage points
since 2001
Increases in pay have not
kept pace with the rising
cost of health care, despite
the reductions in
retirement benefits
01 Health Benefits Costs
Employee’s share of premiums
and point of care costs have
risen significantly over the same
period
Active health care
benefits paid by
employers now cost
more than two-thirds
of benefit costs – up
from nearly one-
third in 2001
02 Retirement Costs
DC only sponsorship has
increased from 41% in 2001
to 76% in 2015
The increase in DC benefits
due to removing a DB plan
for new hires does not
replace the loss in DB
benefits
Retirement costs
have declined by 25%
over the same period
willistowerswatson.com
Total BenefitsActive Health
Care
Total
retirement (DB+DC+PRM)
DB DC PRM
+3.5(from 2001 to 2015)
+5.8(from 2001 to 2015)
-2.3(from 2001 to 2015)
-2.9(from 2001 to 2015)
+1.6(from 2001 to 2015)
-1.0(from 2001 to 2015)
Total Employer Benefit Values as a Percentage of Pay
All employers – Weighted by Employer size, 2001-2015
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14.8%
5.7%
9.1%
3.8% 4.1%
1.2%
16.4%
9.1%
7.3%
1.9%
4.8%
0.6%
18.3%
11.5%
6.8%
0.9%
5.7%
0.2%
2001 2008 2015
n = 1232 for 2001, n = 1422 for 2008 and n = 642 for 2015
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Share of Cost Between Active Health and Retirement
All employers – Weighted by Employer size, 2001-2015
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41.9%
57.6%
63.5%
58.1%
42.4%
36.5%
2001 2008 2015
Active Health Retirement
Employers have witnessed a major shift in the share of benefit cost
between active health and retirement benefits
n = 1232 for 2001, n = 1422 for 2008 and n = 642 for 2015
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Prevalence of Retirement Plan Types for New Hires
All employers – 2001-2015
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Reduction in retirement benefits as a percent of pay is attributed to
decline in DB sponsorship
45% 43% 42% 39% 36% 34%29%
24% 21%16% 17%
12% 12% 9% 7%
14% 15% 16%17%
16% 20%
19%
17%17%
21% 21%
20% 18%17%
17%
41% 42% 42% 44% 49% 47% 52% 59% 63% 63% 63% 69% 70% 74% 76%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Traditional DB Hybrid DB DC only
35%of DC only
plan
prevalence
willistowerswatson.com
Total Employer Retirement Benefit Values as a Percentage of Pay
by Retirement Plan Type for 2015
All employers – Weighted by Employer size
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6.1%
4.6%
3.5%
3.9%
6.1%
1.6%
0.4%
Traditional +DC(n=47)
Hybrid +DC(n=107)
DC only (n=488)
DB DC PRM
N=642
6.2%
8.9%
11.2%
Companies that offer a traditional defined benefit plan to newly hired workers offer
almost double the retirement benefit of those that only offer a DC plan2x
willistowerswatson.com
Total employer benefit values as a percentage of pay by industry for 2015
(weighted by employer size)
0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00%
Retail (n=53)
Oil, Gas and Electric(n=120)
Manufacturing(n=112)
Hi-Tech (n=76)
Health Care (n=81)
General Services(n=38)
Finance (n=98)
Active Health DB DC PRM
19.4%
16.6%
18.3%
17.8%
19.6%
24.2%
15.8%
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Employer considerations
What can employers do to help employees find their way?
9© 2017 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.
Employers are reducing
retirement benefits over a
period when employees
feel vulnerable about their
financial security.
What can employers do to
improve employees’ financial well-
being in the short- and long-term?
Much of health care cost
increases for those with
employer-sponsored
plans are driven by rising
unit prices.
Do employees get greater
value in health care services
for the price increase?
Rising health care costs
for the typical employee
have crowded out
increases in retirement
benefits and pay.
What benefits package do
employees want?
Generation Y is most likely to suffer from short term money concerns
Note: Percentage agree or strongly agree.
Source: 2015/2016 Global Benefits Attitudes Survey, United States. Sample: Full-time employees only.
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only. 10
23%
40%
45%
23%
39%
43%
15%
28%
32%I often worry about my
current financial state
I often worry about
how much debt I have
I have financial
problems that are
negatively
affecting my life
I often worry about my future
financial state 43% 49% 55%
When I come to retire Social
Security will be much less
generous than it is now 50% 78% 80%
When I come to retire the
medical benefits provided by
the government will be worse62% 75% 71%
B
X
Y
Boomers
Generation X
Generation Y
All generations worry about the future and reductions in government benefits
Short-term money concerns Long-term money concerns
Concerns over reductions in Social Security
My generation is likely to be
much worse off in retirement
than my parents’ generation
are/were
67% 80% 78%
Future prospects waningBorn 1946-1964
Ages 52-70 today
Born 1965-1980
Ages 36-51 today
Born 1981-2000
Ages 16-35 today
willistowerswatson.com
29% 24%10% 7%
50%45%
45%
28%
21%32%
44%
64%
70 or later
65 to 69
Before 65
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At what age do you expect to retire?
Source: 2015/2016 Global Benefits Attitudes Survey, U.S.
Sample: Full-time employees who are a member of a retirement plan. Aged 50 or more.
Financial worries drive people to work later
Employees aged 55 or more
Unworried Future
worries
Current
worriesStruggling
Money worries
I feel stuck in my job and
would retire if I could
20%
Unworried
Current
worries
Future
worries
Struggling
38%
28%
45%
Employees increasingly rely on their employer’s retirement plan
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only. 12
Source: 2015/2016 Global Benefits Attitudes Survey, United States.
Sample: All full-time employees.
56%
65%
74%79%
20%
30%
40%
50%
60%
70%
80%
2010 2011 2012 2013 2014 2015
+23%
My retirement plan is the primary way I save for retirement
Despite reductions in plan generosity and a movement to DC, the importance of
employer-sponsored plans is seemingly growing
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A willingness to pay for superior retirement benefits, but patience on health
care costs has largely been exhausted
13© 2017 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.
Source: 2015/2016 Global Benefits Attitudes Survey, U.S.
Sample: Full-time employees only with retirement benefits.
I would be willing to pay a higher amount
out of my pay each month to have a
more generous retirement benefit
62%(agree or strongly agree)
I would be willing to pay a higher amount
out of my pay each month to ensure I
have a guaranteed retirement benefit
63%(agree or strongly agree) +17%
since 2009
I would be willing to pay a higher amount
out of my pay each month to have a
more generous health benefit
29%(agree or strongly agree)
I would be willing to pay a higher amount
each month in order to have lower,
more predictable costs when using
health care services
32%(agree or strongly agree) -10%
since 2010
What benefits do employees want?
A focus on core benefits, but interest in broader products… especially among
Generation Y
If your employer provided you with
an allowance to spend on a variety
of benefits, where do you think you
would spend your money?
A. Retirement plan
B. Health care plan
C. Life and disability insurance,
income protection
D. Financial protection (critical illness
insurance, other insurance)
E. Medical protection (dental and
vision/optical plans)
F. Well-being programs (gym
discounts, healthy eating courses,
onsite services)
G. Employee discounts Retirement
plan
Health care
plan
Life and
disability
Financial
protection
Medical
protection
Health and
well-being
Employee
discounts
36%
33%
27%
30%
30%
27%
8%
9%
9%
6%
7%
8%
11%
12%
13%
4%
5%
7%
4%
5%
8%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Average allocation (%)
Retirement and health
Insurance and income protection
Lifestyle benefits
Source: 2015/2016 Global Benefits Attitudes Survey, U.S.
Sample: Full-time employees only.
© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only. 14
Boomers
B
Gen X
X
Gen Y
Y
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Shifts in Employer Benefit Costs
What can employers do to help employees find their way?
The role of the employer?
How can employees get
more value out of their
accounts - 401k, HSA?
What services will see high
usage and impact,
especially by those at-risk,
at the right moment?
How will ROI be measured
and optimized?
The business case
Money worries are a problem
as they drag on productivity
(linked to poor health, higher
stress, lower employee
engagement and greater
absence).
Financial security is top of
mind and there is interest in
an expanded offering to
address financial worries.
What benefits package do people want?
How can employers respond?
Connecting with
employees
How to overcome the brand
permission and trust hurdle?
How to create a buzz and
brand halo?
How to help employees
measure and socialize their
financial health, integrate
with broader well-being?
Opening for broader set of
benefits to support variety of
employee needs, especially
employees’ short- and long-
term financial security.
Beyond the coreStrengthen the core
benefit offering
1-in-3 would prefer
better health or
retirement benefits to
pay or bonus
Flexible benefits
People show interest in
competitive prices and
convenience in their flexible
benefits.
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Employer considerations
Financial security is a top-of-mind issue for employees.
How can employers respond?
1. Benefits preferences: Create an opening for a broader set of benefits to
support a variety of employee needs. Offer decision-support tools to help
employees make the most of their benefits dollars by linking health plan
selection to account use and supplemental medical products.
2. Segmentation: Identify segments at-risk within the workforce; connect with
those who are struggling financially and provide real-time support to help
employees land on reasonable options that work well for them.
3. Engagement: Meet employees where they are and tailor communication and
facilitate worksite ecosystem to motivate action. Beware of sensitivities about
personal financial issues — employees may be reluctant to be nudged
without trust being built first.
4. Tools and programs: Issues of health, financial well-being, disengagement
and productivity tend to cluster together — do tools and programs match the
breadth of the problems?
willistowerswatson.comwillistowerswatson.com
Consistent sample of employers from 2006 to 2015
General trends in employer retirement
costs by type of plan offering
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–
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Highlights from the consistent sample of employers analysis
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Ten year reduction in PRM
played a role in reducing
overall retirement costs for
employers in our analysis
35%Employers with
hybrid conversions
typically had higher
prior retirement
costs relative to the
rest of the sponsors
in this study
Decrease in DB
sponsorship for new
hires over the last 10
years
Lost value by closing or
freezing a DB plan was not
fully replaced by increasing
DC contributions
Over the past 10 years
the increase in active
health care costs has
doubled the reduction
in retirement costs
Research presented in this section is based on 290 employers that appeared in all years 2006 – 2015.
Companies are categorized by last action taken towards their retirement plans for new hires
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Total Employer Benefit Values as a Percentage of Pay Consistent sample of employers 2006-2015
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19.1%
20.4%
8.8%
11.9%
10.3%
8.5%
3.7%
1.8%
5.3%6.3%
1.3%0.4%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
N=290
Amount of
change
Total Benefits +1.3
Total retirement
(DB+DC+PRM)-1.8
Active HC +3.2
DC +1.0
DB -1.9
PRM -0.9
willistowerswatson.com
Prevalence of Retirement Plan Types for New HiresConsistent sample of employers 2006-2015
34%30% 31% 30% 29% 27% 28% 27% 25% 24%
34%
31% 26%23%
18%16% 13% 12%
11%9%
32%39%
43%47%
53%57% 59% 61% 64% 67%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Hybrid DB Traditional DB DC only
N=290
35%In DB plan
prevalence
for new hires
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Total Employer Retirement Benefit Values as a Percentage of Pay
Last action taken with retirement programsConsistent sample of employers 2006-2015
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12.9%
11.2%11.1%
9.9%
15.4%
10.7%10.7%
8.4%
7.2%
6.5%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Always Traditional DB Always Hybrid DB Hybrid Conversions
DB to DC Always DC
N=290
Sponsors that converted their traditional DB plan
to a hybrid pension typically had higher
traditional DB costs(and DC costs) prior to the
conversion compared to those that have always maintained a traditional
DB plan
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Total Employer Retirement Benefit Values as a Percentage of Pay
Always maintained a traditional DB planConsistent sample of employers 2006-2015
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12.8%
11.2%
6.3% 6.1%
4.1% 4.2%
2.4%
0.9%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Total retirement(DB+DC+PRM) DB DC PRM
N=27
Employers that continue to sponsor a traditional DB plan
have the highest overall retirement
values
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Total Employer Retirement Benefit Values as a Percentage of Pay
Converted to hybrid plan for new hiresConsistent sample of employers 2006-2015
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15.4%
10.9%
6.9%
4.8%
5.8% 5.6%
2.7%
0.5%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Total retirement(DB+DC+PRM) DB DC PRM
N=25
Companies converting to
hybrid pension plans have
reduced employer retirement costs by 1/3 over the past
10 years
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Total Employer Retirement Benefit Values as a Percentage of Pay
Always maintained a Hybrid DB planConsistent sample of employers 2006-2015
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11.1%
10.0%
5.0%4.8%
4.5% 4.6%
1.6%
0.6%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Total retirement(DB+DC+PRM) DB DC PRM
N=46
Employers that continue to sponsor a hybrid plan reduced
the value of their retirement programs
by lowering their value to post-
retirement medical
willistowerswatson.com
Total Employer Retirement Benefit Values as a Percentage of Pay
Always DC plan for new hiresConsistent sample of employers 2006-2015
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7.2%
6.5%6.7%
6.4%
0.5%
0.1%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Total retirement(DB+DC+PRM) DB DC PRM
N=94
Employer values for DC plans have stayed
relatively constant over the past 10 years
willistowerswatson.com
Total Employer Retirement Benefit Values as a Percentage of Pay
Moved from DB to DC plan for new hiresConsistent sample of employers 2006-2015
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10.8%
8.2%
5.2%
0.0%
4.4%
7.9%
1.2%
0.3%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Total retirement(DB+DC+PRM) DB DC PRM
N=98
Employers moving from a DB plan to only a DC plan for new hires do not fully offset the loss of the DB with an increase in DC contributions
willistowerswatson.com
Difference in employer retirement value for employers that
Appeared in Consecutive Data Years and Closed or Froze their DB
Plan in Subsequent Year
27
DB Plans DC Plans Total DB+DC Value
Change in
DB+DC
Employer
Value as a % of
Pay
Overall %
changePrior Year
Current
Year Prior Year
Current
Year Prior Year
Current
Year
2006 – 2007 -1.7% -17.1%
2007 – 2008 -1.4% -14.1%
2008 – 2009 -2.5% -27.4%
2009 – 2010 -0.3% -3.0%
2010 – 2011 -0.3% -3.9%
2011 – 2012 -2.4% -30.2%
2012 – 2013 -0.8% -8.0%
2013 – 2014 -1.3% -13.3%
2014 – 2015 -1.3% -11.9%
n = 19 for 2006 – 2007; n = 13 for 2007 – 2008; n= 9 f or 2008 – 2009; n = 19 for 2009 – 2010; n = 10 for 2010 – 2011; n=7 for 2011 – 2012;
n = 5 for 2012 – 2013; n = 10 for 2013 – 2014; n = 6 for 2014-2015
5.1%0.0%
4.9%8.2% 9.9% 8.2%
5.4%0.0%
4.8%8.7% 10.1% 8.7%
5.6%0.0%
3.6% 6.7% 9.2% 6.7%
5.3%0.0%
3.4%8.4% 8.7% 8.4%
4.3%0.0%
3.5%7.6% 7.9% 7.6%
4.9%0.0% 2.8% 5.4% 7.8% 5.4%
4.8%0.0%
5.6%9.6% 10.4% 9.6%
4.6%0.0%
5.1%8.4% 9.7% 8.4%
4.8%0.0%
6.0%9.5% 10.8% 9.5%
© 2017 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.
willistowerswatson.comwillistowerswatson.com
Consistent sample of employers from 2006 to 2015
Trends in total employer benefit
values by sector
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Finance and OG&E still have significant DB
costs as they are some of the few sectors that
still offer DB plans to new hires
Employer DC values Manufacturing and Pharma have the highest
DC cost per pay
Employer DB values
Total Employer Benefit Values
OG&E and Pharma have the highest employer costs(and some of the highest active
health costs)
While retirement costs have declined over the past 10 years across all sectors, benefit
costs have risen in all except for aerospace as the reduction in retirement costs
mitigated the growth in active health.
Health care sector realized the highest increase in total benefit cost
Employer Health care values
DC and DB values Postretirement and active health values
Retail and Wholesale witnessed the largest
increase as costs ticked up by 46% over
the last 10 years
Pharma currently has the highest employer
active health care per pay cost( 14.0%)
Employer PRM values PRM has declined across all sectors
Highlights from the consistent sample of employers analysis
Research presented in this section is based on
278 employers that appeared in all years
2006 – 2015
Focus on general benefit trends over the past 10 years based on
sector
willistowerswatson.com 30
*Total benefits include Active Health Care, DB, DC and PRM plans
4%3% 2% 3%
2% 2% 2% 1%
4%2%
1%
6% 5%4% 3%
2% 2%3% 2% 1%
5%
1% 1%
6%6%
6%3%
4% 5% 5%5% 5%
6%7%
8%
5% 6%7%
4%4% 5%
6% 7% 8%
5%
6% 7% 5% 6% 6%
1%
1%
1% 1%
1%
2% 1%1%
1%
1% 1% 1% 1%
1%
9%10% 12%
9%11%
13%10%
11% 12%
8% 10% 11%
9% 11% 13%
7%9%
10%
11%13%
14%
9%
10% 11%8%
9%11%
2006 2010 2015 2006 2010 2015 2006 2010 2015 2006 2010 2015 2006 2010 2015 2006 2010 2015 2006 2010 2015 2006 2010 2015 2006 2010 2015
Finance Healthcare High Tech Manufacturing OG@E Retail andWholesale
Pharma Aerospace General Services
Pe
rce
nta
ge o
f P
ay
DB DC PRM Health Care
20.0%19.6%
20.4%
17.2%15.5%
18.9%
16.5% 16.6%17.7%
19.2%19.5%20.6%
22.5%23.1%
24.0%
14.7%15.0%
16.7%
21.0%
23.1%24.2%
18.6%17.3%
18.1%
15.4%
17.3%
15.4%
Total Employer Benefit* Values as a Percentage of Pay By Sector
Consistent Sample of Employers 2006-2015
N=278
+2% +22% +7% +7% +7% +14% +15%
-3%
+12%
willistowerswatson.com 31
4.3%
3.2%
2.4%
3.1%
1.8%
1.6% 1.7%
0.7%
0.3%
3.5%
1.9%
0.8%
5.6%
4.7%
3.5%3.1%
1.8% 1.7%
2.9%
2.2%
1.4%
4.6%
0.6%
0.0%
1.4%
0.4% 0.4%
2006 2010 2015 2006 2010 2015 2006 2010 2015 2006 2010 2015 2006 2010 2015 2006 2010 2015 2006 2010 2015 2006 2010 2015 2006 2010 2015
Finance Healthcare High Tech Manufacturing OG@E Retail andWholesale
Pharma Aerospace General Services
Pe
rce
nta
ge o
f P
ay
Total Employer Defined Benefit Values as a Percentage of Pay By Sector
Consistent sample of employers 2006-2015
N=278
-48%-44% -82% -77% -38% -45% -52% -100% -71%
willistowerswatson.com 32
6.0% 5.8%6.1%
2.8%
3.8%
4.5%
4.9% 4.9% 5.1%
6.4%
7.3%
8.2%
5.4%
6.2%
7.0%
3.6%
4.1%
4.5%
6.1%
6.7%
8.0%
4.5%
6.4%6.7%
4.5%
5.5%5.8%
2006 2010 2015 2006 2010 2015 2006 2010 2015 2006 2010 2015 2006 2010 2015 2006 2010 2015 2006 2010 2015 2006 2010 2015 2006 2010 2015
Finance Healthcare High Tech Manufacturing OG@E Retail andWholesale
Pharma Aerospace General Services
Pe
rce
nta
ge o
f P
ayTotal Employer Defined Contribution Values as a Percentage
of Pay By Sector
Consistent sample of employers 2006-2015
N=278
+17% +61% +4% +28% +30% +25% +31% +49% +28%
willistowerswatson.com 33
1.2%
0.8%
0.3%
0.7%
0.6%
0.2%
0.4%
0.1% 0.1%
0.9%
0.4%0.3%
2.4%
1.4%
0.8%
0.9%
0.2%
0.1%
1.4%
1.1%
0.8%
0.5%
0.2%
0.0%
1.2%
0.1% 0.1%
2006 2010 2015 2006 2010 2015 2006 2010 2015 2006 2010 2015 2006 2010 2015 2006 2010 2015 2006 2010 2015 2006 2010 2015 2006 2010 2015
Finance Healthcare High Tech Manufacturing OG@E Retail andWholesale
Pharma Aerospace General Services
Pe
rce
nta
ge o
f P
ay
Total Employer Postretirement Medical Values as a Percentage
of Pay By Sector
Consistent sample of employers 2006-2015
N=278
-71%-75% -75% -67% -67% -89% -43% -100% -92%
willistowerswatson.com 34
8.5%
9.8%
11.6%
8.9%
11.0%
12.6%
9.5%
10.9%
12.2%
8.4%
9.9%
11.3%
9.1%
10.8%
12.7%
7.1%
8.9%
10.4%10.6%
13.1%
14.0%
9.0%
10.1%
11.4%
8.3%
9.4%
11.0%
2006 2010 2015 2006 2010 2015 2006 2010 2015 2006 2010 2015 2006 2010 2015 2006 2010 2015 2006 2010 2015 2006 2010 2015 2006 2010 2015
Finance Healthcare High Tech Manufacturing OG@E Retail andWholesale
Pharma Aerospace General Services
Pe
rce
nta
ge o
f P
ayTotal Employer Active Health Care Values as a Percentage of
Pay By Sector
Consistent sample of employers 2006-2015
N=278
+36% +42% +28% +35% +40% +46% +32% +26% +33%
willistowerswatson.com
Total Employer Benefit Values as a Percentage of Pay
–AerospaceConsistent sample of employers 2006-2015
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18.6%
18.1%
9.0%
11.4%
9.6%
6.7%
4.6%
0.0%
4.5%
0.5%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Plan sponsorship
N=11
Amount of
change
Total Benefits -0.5
Total retirement
(DB+DC+PRM)-2.9
Active HC +2.4
DC +2.1
DB -4.5
PRM -0.5
Hybrid DB
Traditional
DB
DC Only
46% 37% 18% 18% 9% 0% 0% 0% 0% 0%
36% 18% 18% 18% 9% 9% 9% 9% 0% 0%
18% 45% 64% 64% 82% 91% 91% 91% 100% 100%
willistowerswatson.com
Total Employer Benefit Values as a Percentage of Pay
– FinanceConsistent sample of employers 2006-2015
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20.0% 20.4%
8.5%
11.6%
11.5%
8.8%
4.3%
2.4%
6.0% 6.1%
1.2%
0.3%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
N=44
Amount of
change
Total Benefits +0.4
Total retirement
(DB+DC+PRM)-2.7
Active HC +3.1
DC +0.1
DB -1.9
PRM -0.9
Plan sponsorship
Hybrid DB
Traditional
DB
DC Only
39% 34% 37% 34% 34% 37% 37% 36% 38% 34%
43% 41% 31% 30% 27% 20% 18% 16% 14% 14%
18% 25% 32% 36.0% 39% 43% 45% 48% 48% 52%
willistowerswatson.com
Total Employer Benefit Values as a Percentage of Pay
– General ServicesConsistent sample of employers 2006-2015
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15.4%
17.3%
8.3%
11.0%
7.1% 6.3%
1.4%
0.4%
4.5%5.8%
1.2%0.1%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
N=11
Amount of
change
Total Benefits +1.9
Total retirement
(DB+DC+PRM)-0.8
Active HC +2.7
DC +1.3
DB -1.0
PRM -1.1
Plan sponsorship
Hybrid DB
Traditional
DB
DC Only
18% 18% 18% 0% 0% 0% 0% 0% 0% 0%
9% 9% 9% 9% 9% 9% 9% 9% 9% 9%
73% 73% 73% 91% 91% 91% 91% 91% 91% 91%
willistowerswatson.com
Total Employer Benefit Values as a Percentage of Pay
– Health careConsistent sample of employers 2006-2015
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15.5%
18.9%
8.9%
12.6%
6.6% 6.3%
3.1%
1.6%2.8%
4.5%
0.7% 0.2%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
N=19
Amount of
change
Total Benefits +3.4
Total retirement
(DB+DC+PRM)-0.3
Active HC +3.7
DC +1.7
DB -1.5
PRM -0.5
Plan sponsorship
Hybrid DB
Traditional
DB
DC Only
42% 32% 37% 32% 26% 21% 21% 21% 21% 21%
32% 26% 21% 21% 16% 16% 16% 16% 16% 16%
26% 42% 42% 47% 58% 63% 63% 63% 63% 63%
willistowerswatson.com
Total Employer Benefit Values as a Percentage of Pay
– Hi-TechConsistent sample of employers 2006-2015
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16.6%17.6%
9.6%
12.1%
7.0%5.5%
1.7%
0.3%
4.9% 5.1%
0.4%0.1%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
N=39
Amount of
change
Total Benefits +1.0
Total retirement
(DB+DC+PRM)-1.5
Active HC +2.5
DC +0.2
DB -1.4
PRM -0.3
Plan sponsorship
Hybrid DB
Traditional
DB
DC Only
10% 10% 8% 8% 10% 10% 10% 10% 5% 5%
23% 18% 18% 15% 8% 5% 3% 3% 3% 3%
67% 72% 74% 77% 82% 85% 87% 87% 92% 92%
willistowerswatson.com
Total Employer Benefit Values as a Percentage of Pay
– Manufacturing Consistent sample of employers 2006-2015
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19.2%20.6%
8.4%
11.3%10.8%
9.3%
3.5%
0.8%
6.4%
8.2%
0.9%
0.3%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
N=53
Amount of
change
Total Benefits +1.4
Total retirement
(DB+DC+PRM)-1.5
Active HC +2.9
DC +1.8
DB -2.7
PRM -0.6
Plan sponsorship
Hybrid DB
Traditional
DB
DC Only
38% 33% 32% 30% 27% 23% 23% 19% 19% 15%
28% 26% 19% 17% 13% 13% 9% 7% 4% 4%
34% 41% 49% 53% 60% 64% 68% 74% 77% 81%
willistowerswatson.com
Total Employer Benefit Values as a Percentage of Pay
– Oil, Gas and Electric Consistent sample of employers 2006-2015
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21.5%
24.0%
9.1%
12.7%12.4%
11.3%
5.6%
3.5%5.4%
7.0%
1.4%0.8%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
N=70
Amount of
change
Total Benefits +2.5
Total retirement
(DB+DC+PRM)-1.1
Active HC +3.6
DC +1.6
DB -2.1
PRM -0.6
Plan sponsorship
Hybrid DB
Traditional
DB
DC Only
47% 46% 53% 53% 53% 52% 50% 50% 46% 48%
44% 41% 33% 31% 26% 24% 21% 19% 17% 13%
9% 13% 14% 16% 21% 24% 29% 31% 39% 39%
willistowerswatson.com
Total Employer Benefit Values as a Percentage of Pay
– Pharmaceuticals Consistent sample of employers 2006-2015
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21.0%
24.2%
10.6%
14.0%
10.4%10.2%
2.9%
1.4%
6.1%
8.0%
1.4%
0.8%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
N=11
Amount of
change
Total Benefits +3.2
Total retirement
(DB+DC+PRM)-0.2
Active HC +3.4
DC +1.9
DB -1.5
PRM -0.6
Plan sponsorship
Hybrid DB
Traditional
DB
DC Only
9% 9% 9% 9% 9% 9% 9% 9% 9% 18%
36% 36% 36% 36% 28% 18% 18% 18% 18% 9%
55% 55% 55% 55% 63% 73% 73% 73% 73% 73%
willistowerswatson.com
Total Employer Benefit Values as a Percentage of Pay
– Retail and WholesaleConsistent sample of employers 2006-2015
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14.6%
16.7%
7.0%
10.4%
7.6%
6.3%
3.1%
1.7%
3.6%
4.5%
0.9%
0.1%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
N=20
Amount of
change
Total Benefits +2.1
Total retirement
(DB+DC+PRM)-1.3
Active HC +3.4
DC +0.9
DB -1.4
PRM -0.8
Plan sponsorship
Hybrid DB
Traditional
DB
DC Only
20% 20% 15% 20% 15% 20% 20% 20% 20% 15%
45% 40% 35% 25% 25% 20% 20% 20% 20% 20%
35% 40% 50% 55% 60% 60% 60% 60% 60% 65%
willistowerswatson.comwillistowerswatson.com
Appendix
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–
willistowerswatson.com
Methodology
45© 2017 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.
This study focuses on employer spend as a percentage of average employee’s pay toward:
DB plans (hybrid and traditional DB plans)
DC plans (401(k), 403(b), profit sharing, ESPP, etc.)
Active Health Care
Post-Retirement Medical
Retirement Benefits
Employer value for retirement benefits is based on information from the WTW Benefits Data
Services(BDS) database, a comprehensive benefits data source on provisions to employees related
to retirement, health and welfare, paid time off, lifestyle and flexible benefits. Results shown for 2001-
2015 use all companies in our valuation databases. Other research presented here is based on the
290 employers who appeared in all years 2006-2015.
The employee retirement plan spend as the percentage of average pay is determined using a
synthetic workforce and uses key economic assumptions rather than the companies’ actual
employee workforce so that the spend can be compared on the same basis. The demographics of
the synthetic workforce vary slightly for each year in the study.
To ensure that spend as percentage of pay are comparable from across all years, multiplication
factors were created and used to put values on a 2015 scale.
Active Health Care Benefits
Active health care costs as a percentage of pay use data from the Financial Benchmarks Survey
(formerly HC360) from 2001 to 2015. Health care costs include employer contributions to premiums
for the medical and pharmacy plans, plus any account contributions and rewards/surcharges paid by
the plan. Health care costs are adjusted by age, family size and geography factors to normalize per
employee per year costs across the database.
We define four types of employees according to their financial
worries
Source: 2015/2016 Global Benefits Attitudes Survey, U.S.
Sample: Full-time employees only.
UnworriedEmployees are not worried either for the
short- or long-term
Future worriesEmployees experiencing long-term
worries only
Current worriesEmployees experiencing short-term
worries only
StrugglingEmployees worried about both, the short-
and long-term
48%
20%
10%
22%
CU
RR
EN
T I often worry about my current financial state
I often worry about how much debt I have
I have financial problems that are negatively impacting my life
FU
TU
RE
I often worry about my future financial state
I feel confident I will have enough resources to live comfortably 15 years into retirement
I feel confident I will have enough resources to live comfortably 25 years into retirement
Profile of
employees
Based on the
following
questions:
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