An increasing number of employers plan to move to an employee choice benefit model over the next two years, which means that employees will have greater responsibility for choosing the types and levels of benefits they receive. They will also be responsible for paying for a greater share of their benefit costs, according to a survey of senior finance executives by CFO Research services and Prudential Financial. “Facing a difficult economic environment and rising healthcare costs, companies are looking at ways to manage costs and reduce risk across the benefit spectrum while ensuring that they remain competitive,” said Sam Knox, senior vice president and director of research at CFO.
The survey also reveals that many companies are closer to making decisions on the future of their traditional pension plans. Financial executives are increasingly looking at pension risk transfer and liability driven investment strategies to reduce or eliminate the risks in defined benefit plans.
Christine Marcks, president of Prudential Retirement said, “For their defined benefit plans, finance executives are increasingly likely to adopt liability-driven investment and pension risk transfer strategies. For their defined contribution plans, they ‘are looking’ at retirement income and risk-mitigation products that will enable more employees to retire as planned.”
Concerned that employees are delaying retirement decisions due to inadequate savings, senior finance executives are exploring stable value products, guaranteed income products, and enhancements to target-date funds. They continue to recognize that their companies’ benefit programs attract and retain talent.