When virtually all large employers already offer some form of retirement plan — usually a traditional 401(k) — to employees, there’s not a lot of room for the percentage to rise.
So it should be no big surprise that 93% of employers participating in SHRM’s latest survey to members offer a traditional 401(k) or similar plan this year, just as they did last year, according to the organization’s 2019 Employee Benefits Report.
The latest report, released during the recent SHRM Annual Conference & Exposition in Las Vegas, also found 59% offer a Roth 401(k) or similar plan (also the same percentage as in 2018).
Employers continue to believe that retirement savings and planning benefits are “very” or “extremely” important to their workforce, leading the annual SHRM survey to show little statistical change in retirement benefits programs in the past five years.
Traditional 401(k) plans were offered by 90% of employers from 2015-2017 before increasing to 93% for 2018. Roth 401k plans have seen a sharper increase in the past five years, growing from 48% in 2015 to 59% by 2018.
Employer matches for 401(k) plans hold steady with about 75% of employers offering a match over the last five years, while Roth 401k match contributions continue to rise over time as well (43% in 2019).
Traditional defined benefit retirement plans, already uncommon in 2015, have continued to decline over the last five years. The report found 21% of organizations offer traditional pension plans (open to all employees), down from 26% in 2015. Ten percent of organizations offer a pension plan frozen for current employees or not open to new hires (13% in 2015).
SECURE Act could boost auto-enrollment
Based on information from the survey, 42% of employers automatically enroll new employees into a defined contribution retirement savings plan.
However, the report notes forthcoming legislation in the form of the Setting Every Community Up for Retirement Enhancement (SECURE) Act, may lead to increasing numbers of employers automatically enrolling new employees in retirement savings plans in coming years.
The SECURE Act aims to modernize the retirement system and provide greater savings through employer-sponsored retirement plans. It would include a tax credit of up to $500 per year to small employers for traditional 401(k) and SIMPLE IRA plans that include automatic enrollment, allow unrelated small employers to band together in a 401(k) multiple employer plan (MEP), ensure part time employees are eligible for retirement benefits through their long-time employers, and allow penalty-free withdrawals from retirement plans for any “qualified birth or adoption distributions.”
If the bill becomes law, it will likely have a large impact on the retirement benefits landscape, especially for small businesses.
Benefits for a multigenerational workforce
The report also found companies are conducting extensive research on their specific employee demographic to find a unique benefits package that resonates with the majority of their employees’ needs and stage of life.
“Finding the right combination of benefits that appeals to a multigenerational workforce can be a challenge,” said Alex Alonso, SHRM-SCP, chief knowledge officer for SHRM. “But if you know a good portion of your workforce are Baby Boomers with aging parents, you might choose to beef up your caregiving benefits and flexible scheduling policies. On the other hand, if you have a young demographic, offering benefits like student loan repayment could be the way to go.”
Company-provided student-loan repayment benefits have in fact doubled in the past year, rising from 4% in 2018 to 8% in 2019, the survey found. This category is expected to gain additional traction if pending federal legislation is passed. In addition, more than half (56%) of employers offer tuition assistance for employees pursuing degrees.
Health and wellness benefits
Health-related benefits and wellness benefits saw the greatest increases across employers surveyed, with 20% of employers indicating they increased offerings in those areas.
Interestingly, health-related benefits offerings were increased by 20% of employers, regardless of size, while wellness benefits were more likely to be increased by large employers (500+ employees) than by small employers (1-99 employees). A quarter of employers with 500 or more employees increased wellness benefits since 2018, but only 13% of employers with fewer than 99 employees increased wellness benefits.
The survey shows most organizations (67%) have not made changes in family friendly and wellness benefits in the past year, but notes that benefits in this space represent an opportunity for employers. This is because they are often among those that generate the most enthusiasm from employees, and many can be provided at low cost.
Wellness programs are offered by more than half of employers (58%), but the kinds of services included in these programs have changed in the past five years. Programs focused on particular health conditions (24%) or health screening (31%) have seen declines as insurers have moved into this space, while benefits like quiet rooms (21%), fitness activities (30%) and standing desks (60%) have seen increases.
Although wellness benefits offerings were increased by 20% of organizations in 2019, employers rank wellness near the bottom in importance to their workforce. Wellness ranked 3.4 on a 5-point scale of importance, above only travel (2.6) and housing (2.0).
Employers believe that health care (4.4) and retirement (4.2) benefits are the most important to their workforce.
SHRM’s annual survey of U.S. employers examines more than 250 benefits that organizations may offer their employees. The survey of 2,763 randomly selected HR professionals was conducted in April of this year.
The full survey is available online at shrm.org/benefits19.
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