Time & Attendance
By Patty Kujawa
Jul. 2, 2019
When employees expect to retire versus when employers expect workers to retire can be two very different plans that often translate into a reality neither party imagined.
But there are ways employers can help employees get closer to meeting their expectations while holding company costs down.
Marc Howell, vice president of custom retirement solutions at Prudential Financial, told an audience at the Plan Sponsor Council of America’s 2019 annual conference in May that delaying retirement can hurt workers and employers if little to no planning is involved.
“We are trying to help employers look at [this situation] holistically and help them understand that there is a cost to delaying retirement,” Howell said.
Planning for retirement isn’t a strong suit for either employer or employee, said Patti Vogt Rowey, vice president of the Transamerica Institute and the Transamerica Center for Retirement Studies. Nearly half of employees surveyed in an April study for Transamerica said they guessed at retirement needs and only 19 percent have a written plan. In a separate Transamerica study, 66 percent of employees said employers did nothing to help them transition into retirement.
“Employers definitely have the opportunity to help [employees] help themselves,” Rowey said at the PSCA conference in Tampa, Florida.
Typically when an employer hires a new worker, they are paying more in total compensation than they will realize in economic value, Howell said. Over time, the employee produces more and becomes a valuable asset to the company. Later in an employee’s career, productivity flattens, but health care and other costs rise, making this point exactly when employers would like to see workers retire.
Today, technology has allowed providers to build accurate models of optimal retirement time frames on a workforce level, Howell said. It can help identify and predict when surges in retirement happen.
“It’s important to know when the wave is coming and to get ahead of it instead of reacting to it,” Howell said in an interview.
At the conference, Howell stressed the importance of employers understanding the emotional drivers behind an employee’s plan for retirement. Most often, employees who are financially stressed can’t clearly think about long-term planning for retirement.
Adding emergency savings plans or student loan assistance programs as well as other financial wellness tools can improve workers financial situations, reduce that kind of stress and can improve workers’ ability to think into the future about retirement savings needs.
Howell presented a case study where 69 percent of 1,588 employees expected to work beyond age 67. In analyzing the retirement plan, the company realized that offering non-elective contributions sent employees the wrong message; employees thought this bonus to their retirement plan was going to be enough until they got near retirement and realized it wasn’t.
When the company redesigned the plan to include changes like emphasizing matching contributions, 652 people decided to not delay retirement. Overall, the new plan saved the company $2 million: $500,00 in retirement costs, and an additional $1.5 million in compensation costs like salaries, health care premiums, disability and paid time off programs.
Come see what we’re building in the world of predictive employee scheduling, superior labor insights and next-gen employee apps. We’re on a mission to automate workforce management for hourly employees and bring productivity, optimization and engagement to the frontline.
BenefitsWhat is Earned Wage Access (EWA)? A Few Considerations
Summary Earned wage access (EWA) programs are an increasingly popular way for employees to access their...
benefits, earned wage access products, payroll, time and attendance
BenefitsEEOC says that employers legally can offer incentives to employees to get vaccinated in almost all instances
If you’re an employer looking to get as many of your employees vaccinated as possible, you can rest eas...
ADA, CDC, COVID-19, EEOC, GINA, pandemic, vaccinated
BenefitsFixing some common misconceptions about HIPAA
Ever since the CDC amended its COVID-19 guidance to say that the fully vaccinated no longer need to wea...
COVID-19, health care, HIPAA, human resources, wellness