2015 Workplace Benefits Report - Bank of America · Always consult with your legal, tax, insurance and investment adviso rs before implementing any changes. Bank of America Merrill

2015 Workplace Benefits Report

WORKPLACE INSIGHTS™

Helping employees live their best financial lives

WORKPLACE INSIGHTS™ | 2

For Institutional Use only. Distribution to any other audience is prohibited.

www.baml.com/benefitsreport

Disclosures

Important: This presentation provides general information about fiduciary ideas and strategies for retirement plans. Bank of America Merrill Lynch does not provide advice on the roles and responsibilities of fiduciaries. Always consult with your legal, tax, insurance and investment advisors before implementing any changes.

Bank of America Merrill Lynch is a marketing name for the Retirement Services business of Bank of America Corporation(“BofA Corp.”). Banking may be performed by wholly owned banking affiliates of BofA Corp., including Bank of America, N.A., Member FDIC. Brokerage services may be performed by wholly owned brokerage affiliates of BofA Corp., including Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPF&S”), a registered broker-dealer and Member SIPC.

Investment products:

Certain associates are registered representatives with MLPF&S and may assist you with investment products and services.

© 2016 Bank of America Corporation. All rights reserved. | AR363KQD | PRES-04-16-1669 | 04/2016

ARE NOT FDIC INSURED ARE NOT BANK GUARANTEED MAY LOSE VALUE




Overview of the Workplace Benefits Report

About the Workplace Benefits Report • Bank of America Merrill Lynch’s Workplace Benefits Report is an annual study focused on the role financial

benefit plans play in employers’ talent management strategies. • To access this report go to www.baml.com/benefitsreport

Methodology • Boston Research Technologies interviewed a national sample of 1,020 employers who provide 401(k) plans from

October 14, 2014, through December 4, 2014, on behalf of Bank of America Merrill Lynch. • Small, midsized and large employers were included:

- 600 small (<$5M in 401(k) plan assets) - 280 midsize ($5M to <$100M in 401(k) plan assets) - 140 large ($100M+ in 401(k) plan assets)




http://www.baml.com/benefitsreport




Exploring three key themes

Financial wellness and the “new normal”

Rising health care costs and the emergence of financial wellness programs are changing the role of HR professionals.

Total rewards and incentives Employers increasingly are combining these tools to help improve employees’ financial wellness.

Generational engagement Each generation values benefits differently. Plan sponsors can deepen engagement by targeting messages appropriately.

Financial wellness and the “new normal”




The future of benefits

Financial wellness is no longer a “nice to have” — it’s becoming a “must have”

73% of employers surveyed, including 90% of large companies, said that financial wellness programs will be standard elements of benefits packages in ten years

72% 81% 90%

LARGE ($100M+)

MIDSIZE ($5M to <$100M)

SMALL (<$5M)

401 (k) plan assets




The emergence of financial wellness

A sense of shared responsibility

51% of employers surveyed think employees on the whole are seriously interested in taking steps to improve their financial wellness.

of employers surveyed, including 97% of large companies, feel a sense of responsibility for the financial wellness of their employees.

83%




Financial wellness boosts the bottom line

Most employers believe improving employees’ financial wellness improves their bottom line

Financial Wellness 101 should be taught in high school and in college. We should do this when people are young and not wait until later years.

A surveyed employer said:

* Boston Research Group interviewed a national sample of 1,000 employers from July 2013 through August 2013 on behalf of Bank of America Merrill Lynch. To have qualified for the survey, employers must have offered their employees a 401(k) plan.

Employers believe workplace financial solutions lead to…




Connecting financial education to life priorities

Companies are expanding educational resources and making broader financial education and tools more accessible




What this means for employers

Employees are looking to their employers for help in becoming more financially fit.*

Employers are increasingly embracing the valuable role they can play in supporting their employees’ financial wellness and believe this support can help increase employee satisfaction, loyalty and productivity.

Employers looking to expand and rethink their benefits offerings can start by looking at their benefits holistically — not in silos.

Firms with limited resources may be able to work with their plan providers to develop customized workplace financial solutions tailored to their specific needs.




*2013 Employee Workplace Benefits Report




Rising health care costs pressure benefits plans

Employers are facing challenging decisions about how to best allocate their benefits dollars in light of rising costs

Companies with health care cost increases of 6% or more over the past two years (by company size)




Tradeoffs between benefits

Rising health care costs are sapping resources from other benefits




HSA adoption grows

Health Savings Accounts (HSAs) are gaining popularity at midsize and large companies

Employers who currently offer HSAs (by company size)

** In 2012, Boston Research Group interviewed a national sample of 1,000 employers of all sizes and 1,000 employees from January 2012 through March 2012 on behalf of Bank of America Merrill Lynch. To have qualified for the survey, employers must have offered their employees a 401(k) plan.

LARGE ($100M+)

MIDSIZE ($5M to <$100M)

SMALL (<$5M)

401 (k) plan assets

56%

31% 45%

30% 29%

66%

2012** 2015 2012** 2015 2012** 2015




Despite growth, HSA understanding lags

About eight in ten employers report that their employees view their HSAs mainly as near-term spending accounts rather than as long-term health care savings vehicles.







The rise in health care costs stretches employer benefits dollars, heightening the need to maximize the efficiency of benefits spending.

Employers should determine which benefits employees value the most to ensure any programs offered properly align with employees’ needs and values.

Employers of all sizes should carefully consider the impact of passing higher health care costs on to employees versus absorbing them.

Employers can educate employees on the value of HSAs in funding future health care expenses.

What this means for employers WORKPLACE INSIGHTS™ | 15



Total rewards and incentives




Engaging employees through incentives

Employers generally agree that incentives encourage and reinforce positive behavior

1in7

70%

employers surveyed offers or is considering offering incentives to encourage employees to take advantage of their financial wellness program.

of those employers who offer incentives say they are effective.

Most popular incentives at large employers:

Employers are reminded to work with their legal counsel regarding any expenditures of plan assets.




The early returns on rewards portals

Total rewards portals — intranet sites where employees can track their use of the company’s benefits offerings — are becoming more prevalent

4 out of 10 employers have introduced total rewards portals in an effort to address benefits holistically.

of those employers who offer such portals report they believe employees understand how they work to maximize the value of their benefits.

of large plans reported increased employee usage and engagement with benefits, compared to 33% for midsize employers and 23% of small employers.

Two-thirds of employers with total rewards portals have assessed their effectiveness.

72%

55%





Given the broad agreement on the effectiveness of incentives, there is room for their growth in most benefits programs.

Determining the effectiveness of incentives and monitoring their use will help plan sponsors adapt their incentive strategy accordingly.

Total rewards portals can help employees engage with their benefits and help sponsors integrate their approach.

An employer’s communication strategy should leverage incentives to drive repeat engagement with the portal and have it serve as the central place where employees take action.




We give out gift cards when people complete certain training—small amounts like $25. Employees appreciate that.

A surveyed employer said:

Generational engagement




Connecting with Millennials

Employers surveyed believe that Millennials view benefit plans differently

Benefits valued more by Millennials than other generations (by company size)




Targeting the generations

Among sponsors surveyed who responded that they have marketed to specific generations:

Although employers recognize generational differences, only a fraction have made an effort to target Millennials

Baby Boomers Generation X Millennials

Majority of employers target (91%) Fewer employers target (43%) Very few employers target (7%)

A pressing need to prepare for retirement

This “in-between” generation needs to prioritize planning

Fast growing segment that could benefit if they develop strong financial habits now





Employers can survey employees to learn more about how they prefer to be engaged.

Identify topics that are important to different generations and tailor education to address them.

Use a multi-channeled approach to keep education accessible.

Employers can work with their providers to implement workplace financial solutions with communications targeted to Boomers, Gen Xers and Millennials.







Our mission: Helping employees live their best financial lives

We work closely with plan sponsors to help them design and implement financial wellness programs

For more information:

Call 877.902.8730

Visit us online at benefitplans.baml.com

or email us at [email protected]

http://benefitplans.baml.com/

mailto:[email protected]

mailto:[email protected]

Documents

2015 Workplace Benefits Report - Bank of America · Always consult with your legal, tax, insurance and investment adviso rs before implementing any changes. Bank of America Merrill