Towers Perrin has published an interesting report on the impact of the current recession on benefit plans–Benefits in Crisis – Weathering Economic Climate Change:
Some companies, of course, have already taken steps to reduce benefits, including suspending contributions to 401(k) plans. But in contrast to media attention on the most severe cutbacks, most companies in the Towers Perrin survey are staying the course in the benefits arena, with very few taking precipitous action right now in terms of dramatic reductions or outright elimination of current plans. In part, this is because many have actively managed their programs over the past decade, particularly in terms of limiting new participation in traditional pension plans and increasing employee cost sharing for both active and retiree health benefits.
Some interesting trends to note from the survey:
(1) Nearly 40% of respondents are making or increasing investments in financial education for employees. A similar percentage have changed or plan to change the investment options in DC plans.
(2) Just over half (51%) of respondents have taken or plan to take steps to reduce or eliminate subsidized coverage for future retirees, compared with only about a quarter taking or considering such action for current retirees. 59% do not intend to cut back on or eliminate subsidized coverage for current retirees at all.
(3) While a third of respondents already have health savings accounts built into their plans, a roughly similar number are planning to introduce such features over the next two years or are considering doing so.