Given the choice, employees worldwide tend to select benefits
that offer immediate gratification rather than those that
potentially deliver value over the long term, according to a Mercer
survey of 10,400 workers in ten key markets around the world.
In fact, an extra week of paid time off was among the top-three
employee choices in seven of the ten markets surveyed (see Figure
1). Underscoring this trend of “immediacy” over longer-term
benefits, employees selected a salary increase over all benefit offerings listed in the survey (except
in Canada where paid time off edged out a salary increase.) These
preferences underscore the challenge faced by employers worldwide
in empowering employees to make more of their own benefit choices
while encouraging them to strike the right balance between the
shorter and longer-term value of the benefits they choose.
This insight is just one of many revealed by the new Mercer
Making Smart Benefit Choices survey of workers in ten key markets
(US, UK, Ireland, Canada, Brazil, Spain, France, Italy, China and
Hong Kong) during July and August 2012. The survey sought to
measure the perceived value employees place on various employer-
and employee-paid benefits.
“Employers worldwide are asking their employees to make more and
more decisions for themselves when it comes to their benefit
programs,” said Dave Rahill, President of Mercer’s Health &
Benefits business. “Employees valuing more time off and increased
pay in the current stress-filled economic environment may be
understandable, but there are other benefits that have the
potential to create more income protection through health benefits
and income replacement through retirement and savings vehicles.
This challenge puts even more pressure on employers to deeply
understand and communicate the value of various benefits to their
employees so they can make smart choices.”
The Making Smart Benefit Choices survey also asked employees to
rank the kind of benefits they are willing to pay for themselves,
often referred to as “voluntary” or “flexible” benefits. These
benefits are usually paid for by the employee out of pocket or
through an employer’s flexible benefits plan. These company-run
programs can offer employees discounted prices compared to the open
market.
Responses reflected a broad split between markets in which a
wider range of health benefits are provided publicly and/or by
employers and those where health benefits are not as accessible
(see Figure 2). In the former, benefits that provide additional
insurance are the most popular (e.g., US, UK, Ireland, Canada),
while in the latter (e.g., Brazil, China) offerings like additional
retirement/savings rank highly. In some markets where the state is
the primary provider of health care (e.g., Ireland, Spain, Italy)
supplemental private medical insurance is popular as a voluntary or
flexible benefit.
“More and more employers are under pressure to offer a broader
range of benefits to their employees,” said Amy Laverock, Mercer’s
Global Health & Benefits Strategic Solutions Leader. “Reasons
range from gaps in the public health care systems to competing
firms making creative and innovative benefits available. However,
it is increasingly difficult for employers to simply add core
benefits with the costs of these benefits outpacing inflation.
Voluntary or flexible benefit offerings can often bridge this gap
while empowering employees to chose benefits that match their
particular needs and lifestyles.”
With concern about successful retirement a global issue, the
survey also included questions on perceived retirement readiness
among employees. In most markets, the percentage of respondents who
feel very or fairly concerned about retirement ranged between
two-thirds and three-quarters. This concern is well founded; in
markets outside of Asia approximately 75% are saving less than 10%
of their total compensation towards retirement (see Figure 3).
"Employers need to enhance the perceived value of the benefits
they offer to employees to ensure the investments they make in
these programs generate more strategic, long-term advantages,” said
Fergal McGuinness, Mercer’s Global Defined Contribution Leader. “In
this respect, the survey results illustrating the high levels of
anxiety that exist around retirement readiness are particularly
important. Employers taking simple steps to help employees
understand and plan for their retirement needs can expect a return
in the form of enhanced engagement, loyalty and motivation."
Preferences among US employees
In the US market, Making Smart Benefit Choices revealed several
important insights, particularly in the area of voluntary benefits.
The top three benefits US employees were willing to pay for are
disability, life and auto insurance. Among the list of other
possible voluntary benefits, accident and hospital indemnity
insurance are also relatively popular, while legal assistance and
identity theft insurance rank near the bottom (see Figure 4).
Looking at these results more closely, however, it is clear that
one size does not fit all and different benefits appeal to
different employee segments. Disability insurance appeals more to
those aged 55-64 and transportation industry employees; retail
discounts to young singles living independently and households with
children; and hospital indemnity insurance to those aged 65 and
older and senior managers. Auto insurance ranks highly among those
that work more than 50 hours a week and those in the high-tech
industry; homeowner insurance among those with household incomes
between $50,000 and $60,000; and pet insurance among those in
professional services.
“Voluntary benefits are perhaps the best example across all
types of benefits that perceived value differs across industries,
ages, lifestyles and role,” said Sharon Cunninghis, US Leader of
Mercer’s Health & Benefits business. “Employers will want to
understand these perceived values as they redesign, or add to,
their existing plans in order to provide benefits programs that are
competitive in the marketplace, appeal to employees and enable cost
control.”
About Mercer’s Making Smart Benefit Choices survey
Mercer’s Making Smart Benefit Choices survey was conducted in
order to help employers measure the perceived value employees place
on various benefits. The survey asked respondents which core
benefits, from market-specific lists, are offered by their
employers and whether they participate in these benefits.
Respondents were then asked about their preferences in a trade-off
(conjoint) analysis that allowed Mercer to compare preferences for
12 core benefits against an incremental salary increase. The list
of core benefits varied by market and all benefits included in the
study were of roughly equivalent value. In addition, respondents
were asked to select from a separate list of voluntary benefits the
top three products they would be willing to pay for themselves
through a company program and to gauge their retirement
preparedness. The survey was conducted in July and August 2012
among 10,400 workers across ten markets: US, UK, Ireland, Canada,
Brazil, Spain, France, Italy, China and Hong Kong. To download the
global and market-specific executive summaries, please visit
www.mercer.com/benefit-choice-research.
Making Smart Benefit Choices is a key element of Mercer’s global
Inside Employers’ Minds: Confronting Critical Workforce Challenges
campaign which aims to help organizations understand and address
their most pressing issues and concerns, including benefit
choices.
About Mercer
Mercer is a global consulting leader in talent, health,
retirement and investments. Mercer helps clients around the world
advance the health, wealth and performance of their most vital
asset – their people. Mercer’s 20,000 employees are based in more
than 40 countries. Mercer is a wholly owned subsidiary of Marsh
& McLennan Companies (NYSE: MMC), a global team of professional
services companies offering clients advice and solutions in the
areas of risk, strategy and human capital. With 52,000 employees
worldwide and annual revenue exceeding $10 billion, Marsh &
McLennan Companies is also the parent company of Marsh, a global
leader in insurance broking and risk management; Guy Carpenter, a
global leader in providing risk and reinsurance intermediary
services; and Oliver Wyman, a global leader in management
consulting. For more information, visit www.mercer.com. Follow
Mercer on Twitter @MercerInsights.
Figure 1 - Top Three Benefits in Terms of Employee
Preference
UnitedStates
UnitedKingdom
Ireland
Canada Brazil
Spain France
Italy China
Hong Kong #1 PTO PTO
PTO PTO Food/gas subsidy Private health
coverage Dental coverage DC contribution
Commutation assistance PTO
#2 DC contribution
Disability insurance One-for-all voucher DC
contribution DC contribution Dental coverage
Vision coverage Dental coverage Housing allowance
Flex savings contribution
#3 Decreased health
insurance premium Private health coverage
Company-paid mobile phone Improved health/dental coverage
PTO PTO Disability coverage
Life/accident coverage Savings plan Pre-tax
transportation deduction Source: Mercer's Making Smart Benefit
Choices survey, 2012 PTO = Paid Time Off
Figure 2 - Top
Three Voluntary/Flexible Benefits Employees are Willing to Pay
for
UnitedStates
UnitedKingdom
Ireland
Canada Brazil
Spain France
Italy China
Hong Kong #1 Disability
Life Disability Auto Long-term/retiree medical
Private medical Supplemental medical Dependent
supplemental medical Supplemental retirement
Supplemental savings
#2 Life Retirement
savings Life Homeowner Savings options
Pension plan Dental Life Additional housing
allowance Critical illness
#3 Auto
Critical illness Private medical Life
Life/disability Retirement savings Vision
Supplemental medical Supplemental savings Disability
/ accident Source: Mercer's Making Smart Benefit Choices survey,
2012
Figure 3 - Retirement Preparedness by Market
UnitedStates
UnitedKingdom
Ireland
Canada Brazil
Spain France
Italy China
HongKong
% very/fairly concernedabout
retirement
74% 66% 77% 68% 74% 61%
76% 78% 81% 71%
% saving
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