Trends and predictions about benefits usually pop up around the beginning of the year, giving brokers an idea of what’s to come. But what if those predictions aren’t accurate, or a major legislative update changes the course of these trends? It’s essential to revisit the industry regularly to make sure your trend information is up to date and accurate.
As the midpoint of 2019 approaches, it’s time to see what industry trends are happening now. Here are some to watch:
Continued expansion of benefits
To remain competitive, companies are continuing to expand their benefit offerings rather than (or in addition to) offering higher salaries. The 2019 Lockton Benefits Survey revealed that about 50% of responding companies are expanding their coverage to new eligibility groups in order to give them a competitive edge. Additionally, 57% plan to conduct depending eligibility audits this year as the first step to expanding offerings.
With the unemployment rate still low, there is a continued need for companies to offer ultra-competitive packages to attract talent. Adding voluntary benefit options, broadening provider networks, and expanding coverage eligibility can help attract top talent better than a higher salary.
The rise of severance benefits
Many companies have adopted an “employee-first” mindset, creating a company culture that truly values their employees. This culture is extending past employment, as the number of companies offering severance benefits has increased. According to a recent RiseSmart survey, almost half of the HR leaders pinpoint company culture and the need to take care of their employees as the reason for offering severance benefits.
Common severance benefits include retirement benefits, payout of bonuses, and life insurance. Alternatively, some companies are offering “redeployment” opportunities, where they match separated employees with as many open internal positions as they can. These offerings show that companies are valuing their employees, even after their formal relationship ends.
There has been a lot of talk about millennials and Gen Z-ers entering the workforce at a rapid pace. Therefore, a lot of benefits packages and employee experiences has been tailored to these younger generations. However, recent trends show that retirement-age workers don’t have enough money saved to retire, so they are continuing to work into their 60’s and beyond. There is about a 20% participation rate in the labor force of people aged 65 and older. This is likely a result of insufficient retirement planning and rising healthcare costs.
This creates a unique challenge for HR professionals and brokers. Putting together a benefits program that meets the needs of four different generations of workers is no easy task, but doing so can make a positive impact in an organization.
Social Security Unease
April 2019 saw a scary reality—Social Security paid out more than it earned in revenue for the first time in decades. The 2019 OASDI Trustees Report predicted that by 2020, obligations to those entitled to Social Security will continually cost more than Social Security’s revenue from payroll, benefit taxes, and investment interest. Funds are expected to be entirely depleted by 2035.
With the disagreement on how to handle the issue within Congress, it does not look like there will be a viable solution for quite some time, which worries retirees and people with disabilities. Because of the uncertainty of the situation, people nearing retirement age have begun to seek other means of income for retirement. Therefore, financial wellness and planning programs, 401(k)s, and other retirement savings options are expected to see continued growth.
While these are not the only things going on in the industry, they are essential things to keep in mind as you revisit the industry trends for a mid-year check-in.