MetLife, the well-known insurance and financial services company, has released its Tenth Annual Survey of Employee Benefits Trends. The survey, conducted in the fall of 2011, included the results of 1,519 interviews with benefits decision makers at companies with staff sizes of at least two employees, as well as 1,412 interviews with full-time adult employees age 21 or older, nationwide.

Highlights

Among the key findings of the survey:

• More than half — 52 percent — of employee’s ages 21 to 30 are very worried about running out of money in retirement. This is a significant increase from 2003, when only 33 percent of employees in this age range expressed the same worry. This indicates how heavily the more difficult economic environment has been weighing on younger workers.
• Workers are less focused on savings growth now and more focused on creating a reliable income stream compared to survey participants ten years ago. This indicates that annuities may have more of a place in employee retirement plans than they did in prior years.
• Voluntary benefits — funded via payroll deductions — are much more prominent now, with tremendous growth at smaller employers. In 2003, voluntary payroll-deduction plans were primarily found at large employers. Now even very small employers are increasingly offering these plans as employee benefits.
• There is a strong correlation between satisfaction with benefits and overall job satisfaction. It is very uncommon for employees to report being satisfied with their jobs while being unsatisfied with their benefits packages, and vice versa.
• The vast majority of employers — 70 percent — plan to maintain or improve their benefits packages, despite the comparatively weak economy. Thirty percent anticipated doing so by increasing employee costs, however.
• Forty-one percent of employers report that voluntary benefits are a significant part of their employee-retention strategy. This is a significant increase from the 32 percent that reported the same a year ago.
• Employees are more appreciative of the value of their benefits packages than they were in years past.

Some of the survey’s findings indicated challenges for today’s employers. Overall, employee loyalty to current employers was lower than it has been for seven years, and fully one-third of employees were hoping to be working somewhere else within a year. Younger employees were significantly more likely than older employees to report wanting to jump ship. In part, this is because 60 percent of companies did in fact reduce head count during the recent economic downturn. Younger employees may have little experience in the workplace beyond this last period of austerity, when companies were actively slashing payrolls, increasing workloads for remaining employees, and cutting benefits.

That said, younger employees are looking more to employee benefit packages to help them achieve their financial objectives than their older cohorts did at the same age.

Workers also rely on their employers even for basic insurance coverages that prior generations routinely bought outside of the workplace. Although their parents bought life and disability insurance at the kitchen table from an agent, over 60 percent of today’s employees get their life insurance coverage and disability coverage through work.

The influx of Generation Y workers, or millennials, now in their 20s, is profoundly affecting the overall employer-employee relationship. These younger workers anticipate more career mobility than their forebears and are less trusting of companies’ commitment to them as workers, perhaps because much of their adult lives has been spent working in an era in which companies were going out of business or cutting back in large numbers. But Generation Y and X workers are more eager for financial education and financial planning services via their employers than previous generations were.

The MetLife survey also found that a significant fraction of employees — 25 percent — were substantially behind in their financial planning objectives. But a recent survey from CreditDonkey indicates that the problem may be even worse than MetLife found: Some 40 percent of Americans don’t have $500 in savings.

Conclusion

Among the most significant findings of the survey was the growth potential in the employer relationships with younger workers. While Generation Y workers are less loyal to their current employers, they are also significantly more likely to value benefits than their forebears were, and more than six in ten reported that they were relying on their employee benefit packages for their long-term financial health. That was true of 55 percent of Generation X workers, 42 percent of younger boomers, and 31 percent of older boomers.

So there is an opportunity there for employees to cement their relationships with younger workers. But they haven’t yet closed the deal.

At Cleary, we know how important a comprehensive benefits package can be to your continued success. Give us a call today at 617-723-0700 and we will work with you to create a plan that meets your business objectives, takes into account state and federal laws, and capitalizes on incentives and innovative solutions now being offered.

The zombie apocalypse is upon us. It’s real, and according to recent studies it costs employers billions. But the zombies aren’t taking the form of the undead rising from the grave in a quest to consume the living. Instead, they take the form of exhausted, sick, injured, or demoralized employees showing up to work yet not performing to their full potential.

That’s the conclusion of a new study out of Brigham Young University, which determined that when it comes to damage to employers, the cost ratio of presenteeism versus absenteeism is three to one.

Researchers found that presenteeism was highly correlated with outside factors, including poor health, poor eating habits, financial stress, relationship problems, and other emotional problems originating outside the company. Workers become stressed and distracted and, because they are only human, their problems spill over into the workplace.

According to its chief researcher, the study looked at more than 20,000 workers. Among its findings:

• Those with bad diets were 66% more susceptible to presenteeism than those with healthy diets.
• Smokers reported productivity losses 28% more often than nonsmokers.
• Regular exercisers were 50% less likely than those who only exercised “occasionally” to succumb to presenteeism.

Contributing Factors
In addition to the normal litany of unavoidable minor issues, such as sick children at home or minor financial matters, employee problems can arise if management shuts down important stress valves:

Putting too much emphasis on attendance in workplace performance reviews
Disciplining or stigmatizing workers who call in sick on short notice
Expending managers’ valuable time “verifying” illnesses (a cost sink in itself!)

The Solution
The authors of the study concluded that the use of the cat-o’-nine-tails to improve workplace morale is probably suboptimal. Instead, they suggested some basic leadership and resourcing measures, such as helping managers and workers prioritize what is important and providing “sufficient technological support.” Other suggestions included implementing targeted wellness programs designed to address employees’ specific stressors. For example, where employees may be struggling with financial stressors, distracting them from their work, make financial-planning services available. If health issues are paramount, establish programs to help workers stop smoking, improve eating habits, and address physical and mental health issues.

Lowering presenteeism will require that employers have realistic expectations of workers, help workers prioritize, and provide sufficient technological support. Financial stress and concerns may warrant financial planning services. Health-promotion interventions aimed at improving physical and mental health also may contribute to reducing presenteeism.

Other ideas include sponsoring a workplace flu vaccination program, sending sick workers home immediately, and implementing a “no questions asked” PTO policy, as opposed to segregating sick days and personal-leave days. Leaders can also reward and encourage midline managers who are creative in allowing staffers flexible work arrangements — though care should still be taken to comply with wage and hour laws.

At Cleary, we know how important a comprehensive benefits package can be to your continued success. Give us a call today at 617-723-0700 and we will work with you to create a plan that meets your business objectives, takes into account state and federal laws, and capitalizes on incentives and innovative solutions now being offered.

If you’re changing employers, one of the many transitions you’ll face is what to do with the money you’ve accumulated in your 401(k). Making the right choice can keep you on track for a financially secure retirement, but making the wrong choice can wind up costing you plenty. Let’s take a look at your options.

Cashing Out

Unless you’re facing a financial emergency that leaves you no other option, it’s usually a bad idea to cash out your 401(k). Why? For starters, tapping your retirement funds early accelerates tax liability and can subject you to stiff penalties.

You’ll owe federal income taxes – and, depending on where you live, maybe state and local income taxes as well – on any cash you withdraw, as well as an additional federal penalty of 10% if you’re younger than age 59 . (One exception: If you’re older than age 55 when you leave your job, you may be exempt from this penalty. Ask your tax adviser.) Bear in mind that your employer also is generally required to withhold 20% of your distribution as a down payment on your federal income tax bill.

In addition, by withdrawing funds you’ll not only reduce the size of your nest egg but also lose its tax-deferred growth potential. The combined effect of significant tax penalties and lost appreciation potential can be enormous.

Leaving Your 401(k) or Other Qualified Plan Account Alone

As long as your account has at least $5,000 in it, by law you can’t be forced out of the plan, and your simplest option may be to do nothing and maintain your existing qualified-plan account.

There can be many reasons to choose this option. For example, your old plan may offer a particularly good lineup of investment choices. Or perhaps your new employer’s plan is significantly inferior to your current one, or restricts eligibility for participation to employees with at least one year of service.

Whatever the reason, if you’re happy with your old 401(k) account, you may not want to change a thing.

Rolling Your Account Over

Although you can keep your old 401(k) account active, you won’t be able to make additional contributions to it after you switch jobs. If you wish to streamline the number of accounts you own, consider rolling over your 401(k) savings into your new employer’s 401(k) plan – or into an IRA.

Which is better? It depends on your particular needs. Even though there aren’t major differences between the two options, both have their benefits and drawbacks.

If you’re planning to participate in your new employer’s 401(k) and you don’t already have an IRA, rolling over to the new 401(k) may be the more streamlined option because you’ll have only one account to keep track of.

But an IRA offers an important advantage: It can provide you with more flexibility. If you want to own a specific mutual fund or security in your retirement account, you can find an IRA custodian that will allow you to do so.

A 401(k), by contrast, limits you to the options your employer chooses to make available to you. Some plans offer a broadly diversified collection of strong-performing funds. Others are limited to only a few funds with middling track records. If you’re not sure about the quality of your new plan, your financial adviser can help you evaluate it.

Keep in mind that IRAs can have their downsides, too. For one, they typically charge investors modest administrative fees, while employers typically pick up the costs involved with a 401(k) plan. Also, IRAs can’t allow loans, while some 401(k) plans do. (Ask your 401(k) administrator about the specific benefits available to you.) On the other hand, IRAs offer more opportunities for penalty-free withdrawals before age 59 .

Go Direct

Whichever option you choose, a direct rollover is usually best. For instance, a rollover IRA into platinum or any other precious metal for that matter could act as an inflation hedge. With a direct rollover, you never take formal possession of your funds. The administrator of your old 401(k) plan transfers your assets directly to your new 401(k) administrator or IRA custodian. In some cases, the check will first be sent to you to hand over to your new administrator. As long as the check isn’t made out to you personally, this is still considered a direct rollover.

An indirect rollover is when you take personal possession of your assets before ultimately rolling them over. In this case, if you don’t redeposit the funds within 60 days, it’s considered a distribution, and you’ll owe income taxes and, generally, an additional 10% early-withdrawal penalty.

Your former employer also will be required to withhold 20% of your account value for federal income taxes, even though you’re then doing a tax-free rollover. Generally, this option doesn’t make sense. If you wind up having withholding, don’t forget to replace this amount when you roll over the funds within 60 days to avoid additional taxes and penalties.

Keep Saving

The good news is that changing jobs doesn’t have to mean interrupting your retirement savings plan. Avoid the expensive trap of cashing out your 401(k), and you can continue to make progress toward your long-term financial goals.

Presented by John Steiger, ChFC, AEP Certified Financial Planner

At Cleary, we are committed to a holistic approach of protecting and preserving our clients’ financial assets. Give us a call today at 617-723-0700 and let us know how we can help you.

You don’t hear about government entities using stimulus funds on uncompleted public works projects despite numerous contractor failures during the recent economic downturn. Why is this? Public works projects have a third-party guarantee that ensures that projects are completed and that all bills to subcontractors and suppliers are paid. This guaranty is offered by a surety company and the guarantee is known as a surety bond.

The surety concept is not new. Originally it involved an individual providing surety for another individual. As a result of federal taxpayer losses on uncompleted construction and service contracts in the late 19th century, there have been several pieces of legislation enacted to protect taxpayers from these types of losses. The late 1800s saw the advent of well-funded corporate sureties stepping into the surety bond marketplace. They served as a mechanism to encourage trade over long distance.

Currently, the Miller Act at the national level and “little” Miller Acts at the state level require a surety bond in place on all public projects. However, they do have varying thresholds as to when they are required. For instance, a performance bond is not required on federal contracts under $100,000.

An entity looking to obtain surety “credit” must pass a rigorous prequalification process, much like obtaining a bank loan. The surety evaluates the contractor’s credit, financials, and experience to determine if it will extend surety credit. This process also serves to assist government entities in making sure that only the most qualified contractors are able to bid on government work.

As the New England Regional Director of the National Association of Surety Bond Producers, we work in conjunction with the surety industry to make certain smaller and minority contractors get qualified to participate on government contracts. If you have any questions or think you may be a candidate for a contract surety bond, contact Michael Regan at Cleary Insurance.

At Cleary, we will evaluate your business exposures and work with you to develop a comprehensive plan to safeguard your business. We are members of the National Association of Surety Bond Producers (NASBP), the professional organization for agents that also specialize in surety bonding. Give us a call today at 617-723-0700.