Employee Benefits: Which Ones Are Surviving the Weak Economy?

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Society for Human Resource Management

Jun 28, 2010, 08:30 ET

SAN DIEGO, June 28 /PRNewswire-USNewswire/ -- The Society for Human Resource Management (SHRM) today released a new report showing that 63 percent of HR professionals say the economic recession negatively affected their organization's employee benefit offerings "to some extent," over the past year.

About a third (28 percent) said the recession didn't have any effect on their employee benefit packages, with only nine percent reporting it had a "large" affect on what they were able to keep providing to their employees.

The findings are detailed in the SHRM 2010 Employee Benefits Research Report, released today at SHRM's 62nd Annual Conference and Exposition in San Diego.

Must haves like family-friendly benefits remain largely unchanged from last year while several types of housing and relocation benefits took a hit. The report also shows a downward trend, some significant, in several employee benefit categories over the past five years, from 2006 to 2010.

The percent of payroll paid on benefits holds steady in 2010 when compared with 2009. On average 19 percent of an employee's annual salary was spent on mandatory benefits, 18 percent on voluntary, and 11 percent on pay for time not worked benefits. In 2009, HR professionals reported that 20 percent of payroll costs were spent on mandatory benefits, 19 percent for voluntary benefits, and 11 percent for paid leave benefits.

Mandatory benefits typically include unemployment, worker's compensation, and Social Security. Voluntary benefits include medical plans, dental plans, prescription coverage, flexible spending accounts, vision plans, and survivor benefits.

"Although the recession has presented challenges in the continued support of some employee benefits, some organizations are finding creative ways to replace the more costly benefits with alternative, less costly, family-friendly benefits," said Mark Schmit, director of research at SHRM. "These progressive companies will likely fare better in retaining key talent as employment opportunities increase post-recession."

Key findings from the survey include:

Two of the 14 different types of housing and relocation benefits saw significant cuts from 2009 to 2010. In 2009, 36 percent of HR professionals said their company provided "location visit assistance" compared to 20 percent in 2010. Also, the number that provided "rental assistance" dropped from 12 percent in 2009 to three percent in 2010. Since 2006, rental assistance benefits fell 19 percent and location visit assistance 20 percent.

Business travel benefits cuts were minor from 2009 to 2010, but the changes have been significant over the past five years. Only four percent of organizations cut benefits that allow employees to keep frequent flier miles, hotel points, and make paid long-distance calls home while on business travel. Over five years, however, 24 percent of employers cut paid long-distance call benefits, eight percent reduced travel accident insurance benefits, and eight percent also cut paid dry cleaning business travel benefits.

Cuts to retirement savings and financial planning benefits changed little from 2009 to 2010 but did so significantly over five years. Among the 15 different types of benefits in this category, the number of organizations offering "individual investment advice" dropped from 48 percent in 2006 to 40 percent in 2010. Even more dropped "retirement planning services" — 52 percent in 2006 to 39 percent in 2010. The "traditional defined benefit pension plan" is also offered by fewer employers with 48 percent offering it in 2006 compared with 27 percent in 2010.

Opposite-sex domestic partners continue to be included in family-friendly benefit plans. Family-friendly benefits for domestic partners — same-sex and opposite-sex — are offered by 13 percent of organizations in the 2010 survey. SHRM began tracking the trend in 2008 and the numbers hold steady.

Health care and welfare benefits for domestic partners are holding steady. In the report released today, 37 percent of organizations report offering the benefit to same-sex domestic partners, while 38 percent offer the benefits to opposite-sex domestic partners. The numbers hold steady to 2008 when tracking began.

Overall, health care and welfare benefits were a mixed bag of offerings in the 2010 report. While the "rehabilitation assistance" benefit increased from 37 percent in 2009 to 45 percent in 2010, the "long-term health care insurance" benefit dropped from 39 percent to 31 percent during the same time period. "Mental health coverage" benefits continue to increase — from 80 percent in 2009 to 82 percent in 2010, and from 73 percent in 2006.

The other benefits category continues to decline in several types of coverage. HR professionals reported fewer companies offering: noncash company-wide performance awards; company-purchased tickets to events cultural, sporting, and theme park; Also on the decline are take your child to work day, holiday parties, company picnics, and milestone awards.

The 2010 survey provides data on 279 different benefits and highlights responses from 534 randomly selected HR professional who are members of SHRM.

Colonial Life is the exclusive sponsor of the SHRM 2010 Employee Benefits Survey Report. The company is based in Columbia, South Carolina.

To read this survey: http://www.shrm.org/surveys. Follow SHRM research on Twitter at http://twitter.com/SHRM_Research.

About the Society for Human Resource Management

The Society for Human Resource Management (SHRM) is the world's largest association devoted to human resource management. Representing more than 250,000 members in over 140 countries, the Society serves the needs of HR professionals and advances the interests of the HR profession. Founded in 1948, SHRM has more than 575 affiliated chapters within the United States and subsidiary offices in China and India. Visit SHRM Online at www.shrm.org.

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SOURCE Society for Human Resource Management