Employee appreciation of benefits is an essential component to a productive workplace. To fully appreciate benefits, employees must gain an understanding of their value. The following facts and tips are aimed at helping achieve this goal.
Did You Know?
The U.S. Chamber of Commerce reported employee benefit costs averaged 42.3% of payroll in 2003.
Employee benefit costs for small companies averaged 31.9% of payroll, while costs for large companies averaged 44.9%.
In 2003, an employee received an average of $18,000 worth of employee benefits in addition to wages.
Most employees are not aware of the true cost plan sponsors spend on benefits. Communicating this information can help them understand the financial commitment made on their behalf. Employers can demonstrate the importance of benefits and garner appreciation among plan participants by sharing the cost of benefits through personalized annual benefit statements.
Health Care
Health care related benefits make up the largest portion of employee benefit costs (35%).
In 2003, plan sponsors spent an average of $6,277 per employee on health care related benefits. Over a five year period, this amounts to $31,385.
Given this substantial investment, it makes sense to maximize health care dollars spent by educating employees about how to effectively utilize their health care plan and promoting healthy lifestyle choices.
For information on maximizing health care dollars by focusing on wellness and health literacy programs, visit the International Foundation's Critical Issues section, which is a members-only service available to the public through the month of May.
Health Literacy: A Cost Management Opportunity
The Need for Wellness: Ounces of Prevention
Retirement Benefits
- Assuming an after-tax rate of return of 4.5%, plan participants need to save $1,000,000 for retirement to produce an annual income of $45,000 in retirement.
- Given the uncertainty regarding the future of Social Security and the decline in American savings rates, employer-sponsored retirement plans have emerged as the most valuable tool in the retirement equation.
- According to the Investment Company Institute (ICI), a 25-year-old who invests $1000 per year for 10 years and stops investing will have a considerably larger nest egg at age 65 than an individual who invests $1000 per year for 30 years beginning at age 35 ($274,559 vs. $164,908). Encourage young employees to start saving early by demonstrating the power of compounding.
One method used to increase participation in employer-sponsored retirement plans is automatic enrollment. For more information on this approach, read the Automatic Enrollment issue of In Focus. In Focus is available for International Foundation members. In celebration of National Employee Benefits Day, this issue will be available to the public through the month of May.
Communication Tips
- Use materials that are easy to understand
- Hold individual and group informational meetings and workshops
- Use interactive materials to ensure employee understanding
- Use a variety of methods to communicate with employees, including e-mail, automated telephone systems, a company intranet, kiosks, payroll stuffers and other written material delivered at the workplace and to home addresses
- Communicate on an ongoing basis
- Measure the effectiveness of benefits communication by conducting surveys and focus groups.