IASA December Industry Pulse Executive Summary. December 2014 Poll Company Retirement Plans

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Austin Cameron
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1 IASA December Industry Pulse Executive Summary December 2014 Poll Company Retirement Plans Executive analysis of survey results exclusively presented to IASA members IASA is pleased to provide this executive report on the results of the December 2014 Industry Pulse Poll Company Retirement Plans. This summary is being provided exclusively to IASA members. The December 2014 poll was the first in a series of polls dedicated to employee benefits. From the results, we are providing industry benchmarks so members can determine where their company and employees fit within the industry. Participation in the poll was strong. The industry makeup of those completing this poll was: Health, 5% Other, 15% Life, 15% P&C, 65% P&C Life Health Other The following were the key questions asked in the survey and the analysis of the responses: 1. What types of retirement plans does your company offer (select all that apply)?

The December 2014 poll was the first in a series of polls dedicated to employee benefits.

2 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Defined Contribution - 401(k) Types of Retirement Plans Offered Defined Benefit (pension) Deferred Compensation Other 97% of IASA Members have access to company sponsored 401(k) plans. Defined Contribution 401(k) plans are the overwhelmingly most popular retirement savings vehicle provided to employees of IASA member companies. Defined Benefit pension plans are the second most common retirement plan offered by IASA member companies, with 38% of respondents indicating their employer offers defined benefit plans. 27% of IASA members also have access to deferred compensation plans, and 8% of the members surveyed have other retirement savings plans available - primarily Employee Stock Ownership Programs and Money Purchase Pension Plans. 2. If your company offers a Defined Benefit plan (i.e. traditional pension), how does funding occur?

Defined Benefit pension plans are the second most common retirement plan offered by IASA member companies, with 38% of respondents indicating their employer offers defined benefit plans.

3 Funding Mechanism of Defined Benefit Plans Employer Only Combination of Employee & Employer Employee Only 0% 10% 20% 30% 40% 50% 60% 70% 80% IASA Member Companies contribute to 98% of the defined benefit plans available for employees. 31% of the respondents indicated that the employee also contributes to defined benefit plans. Only 2% of respondents indicated that the employee is the sole source of contributions to defined benefit programs. The December poll did not inquire about the status of the defined benefit retirement plans, therefore the survey cannot yield accurate results on whether a defined benefit plan at an IASA company maintains an active or frozen state. A September 2014 article by Towers Watson (link to article) indicates that 22% of all new hires at Fortune 500 companies have access to defined benefit plans. 38% of respondents in the December Poll indicate availability of defined benefit plans at their employers. The survey data suggest IASA Member companies could be offering defined benefit plans to employees at a higher frequency than Fortune 500 companies, but the December poll questions cannot confirm a higher frequency of defined benefit plans in the insurance industry than companies of the Fortune If your company offers a 401(k) plan, which type of employee deferrals does the plan offer?

Only 2% of respondents indicated that the employee is the sole source of contributions to defined benefit programs.

4 401(k) Contribution Types 3% 35% Traditional (Pre-Tax) Traditional and Roth Unsure 62% 62% of respondents indicate their company 401(k) plan offers Traditional and Roth contribution options. 35% of respondents indicated that traditional (pre-tax) contributions were the only type of contributions offered to the plan participants. A 2013 report issued by Aon Hewitt (link to article) indicates that approximately 50% of all 401(k) plans incorporated a Roth contribution feature. 4. If your company offers a 401(k) plan, do you contribute enough to the plan to receive the full matching contribution? 70% Employee Contribution Level 60% 50% 40% 30% 20% 10% 0% In Excess of Company Match Just Enough to Obtain Full Match Company Does Not Match Contribute Less than Match Other

A 2013 report issued by Aon Hewitt (link to article) indicates that approximately 50% of all 40

5 86% of IASA Members receive full matching 401(k) contributions from employers. IASA members clearly understand the importance of retirement savings and take advantage of incentives available to save for retirement. 60% of survey respondents contribute to their 401(k) in excess of their company match percentage, and 26% contribute at a level adequate to obtain the full company matching contribution. Only 8% of respondents indicated that their company does not match 401(k) contributions, and 1% of the respondents do not participate in their company sponsored 401(k) plans. 5. If your company offers a 401(k) plan, what maximum percentage of your salary will the company match employee contributions? 401(k) Match % > 6% 4% - 6% 1% - 4% 0% 0% 10% 20% 30% 40% 50% 60% 60% of IASA Members have access to a 401(k) employer matching contribution of at least 4% of their salary. IASA member companies offer significant financial incentives to entice employees to save for retirement. Approximately half of employees surveyed participate in a 401(k) plan with a match between 4% and 6%. 11% of employees surveyed are eligible to receive greater than 6% of their salary in employer matching contributions to their 401(k) plan. A recent analysis report released by Fidelity Investments (link to article) indicated the average 401(k) matching contribution is 4.3% across all 401(k) plans administered by Fidelity. In conclusion: The IASA Industry Pulse is a monthly poll designed for IASA members and associate members to provide feedback on current topics impacting the insurance industry. It s a social world we live and work in, and IASA is looking to stay in touch with as many insurance industry professionals as possible. Whether you are an expert or a novice, we want you to join the conversation.

60% of survey respondents contribute to their 401(k) in excess of their company match percentage, and 26% contribute at a level adequate to obtain the full company matching contribution.

6 Finally, as with the original data presented in the survey results, the executive summary is not being referenced as statistically verifiable. Although the survey did include reasonably broad participation, with 337 respondents, we have not applied rigorous statistical measures to discern statistical significance. Absent the statistical procedures, some relevance from the responses did appear to exist. Further, for the segmentation and analysis presented in this report, the splits by insurance carrier size were fairly reasonable across the board so some level of confidence in the results can be inferred.

statistical significance. Absent the statistical procedures, some relevance from the responses did appear to exist.

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