Overall Shifts in United States Employer Benefit Costs€¦ · Source: 2015/2016 Global Benefits Attitudes Survey, U.S. Sample: Full-time employees only with retirement benefits

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Overall Shifts in United States Employer Benefit Costs

IABA Annual Meeting

July 28, 2017

Washington, DC

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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


Shifts in Employer Benefit Costs

Highlights


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


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


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


Share of Cost Between Active Health and Retirement

All employers – Weighted by Employer size, 2001-2015


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


Prevalence of Retirement Plan Types for New Hires

All employers – 2001-2015


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


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


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%



Employer considerations

What can employers do to help employees find their way?


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


29% 24%10% 7%

50%45%

45%

28%

21%32%

44%

64%

70 or later

65 to 69

Before 65


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


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


A willingness to pay for superior retirement benefits, but patience on health

care costs has largely been exhausted



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)


out of my pay each month to ensure I

have a guaranteed retirement benefit

63%(agree or strongly agree) +17%

since 2009


out of my pay each month to have a

more generous health benefit

29%(agree or strongly agree)


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


Sample: Full-time employees only.


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.


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?


Consistent sample of employers from 2006 to 2015

General trends in employer retirement

costs by type of plan offering

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–


Highlights from the consistent sample of employers analysis


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


Total Employer Benefit Values as a Percentage of Pay Consistent sample of employers 2006-2015


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


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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Last action taken with retirement programsConsistent sample of employers 2006-2015


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



Always maintained a traditional DB planConsistent sample of employers 2006-2015


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



Converted to hybrid plan for new hiresConsistent sample of employers 2006-2015


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


N=25

Companies converting to

hybrid pension plans have

reduced employer retirement costs by 1/3 over the past

10 years



Always maintained a Hybrid DB planConsistent sample of employers 2006-2015


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


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



Always DC plan for new hiresConsistent sample of employers 2006-2015


7.2%

6.5%6.7%

6.4%

0.5%

0.1%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015


N=94

Employer values for DC plans have stayed

relatively constant over the past 10 years



Moved from DB to DC plan for new hiresConsistent sample of employers 2006-2015


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


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


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.


Consistent sample of employers from 2006 to 2015

Trends in total employer benefit

values by sector


–


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

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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%


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



Pe

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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%


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



Pe

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ayTotal Employer Defined Contribution Values as a Percentage

of Pay By Sector


N=278

+17% +61% +4% +28% +30% +25% +31% +49% +28%


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



Pe

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Total Employer Postretirement Medical Values as a Percentage

of Pay By Sector


N=278

-71%-75% -75% -67% -67% -89% -43% -100% -92%


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



Pe

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ayTotal Employer Active Health Care Values as a Percentage of

Pay By Sector


N=278

+36% +42% +28% +35% +40% +46% +32% +26% +33%



–AerospaceConsistent sample of employers 2006-2015


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%



– FinanceConsistent sample of employers 2006-2015


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%



– General ServicesConsistent sample of employers 2006-2015


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%



– Health careConsistent sample of employers 2006-2015


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%



– Hi-TechConsistent sample of employers 2006-2015


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%



– Manufacturing Consistent sample of employers 2006-2015


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%



– Oil, Gas and Electric Consistent sample of employers 2006-2015


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%



– Pharmaceuticals Consistent sample of employers 2006-2015


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%



– Retail and WholesaleConsistent sample of employers 2006-2015


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%


Appendix


–


Methodology


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


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:


Documents

Overall Shifts in United States Employer Benefit Costs€¦ · Source: 2015/2016 Global Benefits Attitudes Survey, U.S. Sample: Full-time employees only with retirement benefits