COMPENSATION, RETIREMENT AND BENEFITS TRENDS REPORT NON-PROFIT INDUSTRY

Transcription

1 COMPENSATION, RETIREMENT AND BENEFITS TRENDS REPORT NON-PROFIT INDUSTRY 2012/2013

2 Today s Agenda INTRODUCTIONS BACKGROUND COMPENSATION PRACTICES HEALTH AND WELFARE BENEFITS RETIREMENT PLANS QUESTIONS Discover the Verisight difference. Call , visit www. or CRBTrends@. 2012/2013 Compensation, Retirement and Benefits Trends Report 1

3 POLLING QUESTION #1 Which best describes your organization type? Professional/membership/trade association Charitable organization Social Services (e.g. United Way, Red Cross, Salvation Army, etc.) Educational institution Other 2

4 Today s Presenters Rena Somersan Principal, Compensation Consulting Group, Verisight, Inc. Rena has more than 19 years of consulting experience in Non-Profit organizations, Healthcare, Manufacturing, and other industries. Rena assists clients in executing their strategic human resources and compensation initiatives. Her focus has been in the areas of workforce and executive compensation and performance management initiatives, discussing the strategic direction of the organization and overall Human Resources philosophy. Martha Sadler Executive Vice President, Benefits Consulting, Verisight Inc. Martha has over 20 years of experience in advising businesses on retirement plan matters and leads the Retirement Plan Consulting practice for the firm. Martha specializes in assisting clients in detecting and correcting operational and fiduciary failures. This assistance includes navigating the available selfcorrection programs, preparing voluntary submissions to the Internal Revenue Service or Department of Labor, and representing the client in the event of a governmental audit. Jason Casey Senior Vice President, Actuarial, Verisight Inc. Jason joined Verisight in 2012 and is responsible for overseeing the actuarial team and its future growth. Jason brings over 15 years of retirement and health & welfare consulting experience to Verisight. He brings a unique skill set which combines a broad range of benefits consulting and leadership expertise. Prior to joining Verisight, Jason has held various leadership positions at some of the largest national consulting firms. More recently, Jason spent five years at Fidelity Investments leading their benefits consulting and actuarial practice in Chicago. 2012/2013 Compensation, Retirement and Benefits Trends Report 3

5 Report Background The annual Compensation, Retirement and Benefits Trends Survey is designed to uncover key trends across the broad spectrum of retirement, health and welfare benefits and employee reward programs. The result is a comprehensive view of firms total employee reward programs that is rarely available from a single source. Nearly 1,000 organizations (958) participated in the survey. The majority of the survey respondents are mid-sized companies; however, small and large firms are also represented. Respondents reflect a wide range of industry types including manufacturing, healthcare, construction, finance/banking, distribution and services, with the majority of these industries organized as for profit entities. Nonetheless, not-for-profit organizations participated notably at 12 percent. The online survey was launched on August 21 and closed on October 21, /2013 Compensation, Retirement and Benefits Trends Report 4

6 Base = /2013 Compensation, Retirement and Benefits Trends Report 5

7 KEY DEFINITIONS: Northeast Midwest South West New England: Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont Middle Atlantic: New Jersey, New York and Pennsylvania East North Central: Illinois, Indiana, Michigan, Ohio and Wisconsin West North Central: Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota and South Dakota South Atlantic: Delaware, District of Columbia, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia and West Virginia East South Central: Alabama, Kentucky, Mississippi and Tennessee West South Central: Arkansas, Louisiana, Oklahoma and Texas Mountain: Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah and Wyoming Pacific: Alaska, California, Hawaii, Oregon and Washington Base = 757 Note: Not all respondents provided demographic information 2012/2013 Compensation, Retirement and Benefits Trends Report 6

8 2012/2013 Compensation, Retirement and Benefits Trends Report COMPENSATION PRACTICES 2012/2013 Compensation, Retirement and Benefits Trends Report 7

9 Factors Impacting Decisions Employers continued to turn to a variety of labor cost containment measures in 2012 and anticipate additional actions in Which cost reduction and/or containment strategies have you implemented or plan to implement? Non-Profit Industry Base = 88 All Industries Base = 704 Compensation Practices 8

10 Factors Impacting Decisions The cost of benefits remains the factor most often identified as having a significant impact on organizations total compensation decisions for What factors had significant impact on your total compensation/rewards (salary, bonus, benefits, and retirement) decisions for 2012? Non-Profit Industry Base = 92 All Industries Base = 755 Compensation Practices 9

11 Salary Increases Please indicate the percentage amount allocated for base salary increases for 2013, as a percent of base pay All Industries Not-For-Profit Executives Mean 2.7% 2.9% Median 3.0% 3.0% Salaried (Exempt) Mean 2.7% 2.8% Median 3.0% 3.0% Salaried (Non-exempt) Mean 2.6% 2.7% Median 3.0% 3.0% Hourly (Non-exempt) Mean 2.7% 2.6% Median 3.0% 3.0% Hourly (Union) Mean 2.0% 1.7% Median 2.3% 2.3% Base Includes zeros (i.e., salary freezes) *Caution low base Compensation Practices 10

12 Salary Structures The majority of organizations have a formal salary structure with grades, minimums, midpoints and maximums to effectively manage compensation. Do you have a formal salary structure (i.e., ranges with a minimum and maximum) to manage compensation across levels within the organization? Base = 767 Base = 94 Compensation Practices 11

13 Salary Structures Salary structures are anticipated to move anywhere from percent, depending on the employee group, in Please indicate the percentage salary range/structure movement (only enter 0% if no adjustments were made or anticipated for an employee category) Actual Salary Structure Adjustments 2013 Anticipated Salary Structure Adjustments All Industries Not-For-Profit All Industries Not-For-Profit Executives Mean 2.0% 2.0% 1.7% 2.0% Median 2.0% 2.1% 2.1% 2.2% Salaried (Exempt) Mean 1.9% 1.7% 1.9% 1.8% Median 2.1% 2.0% 2.2% 2.2% Salaried (Non-exempt) Mean 1.7% 1.6% 1.7% 1.7% Median 2.1% 1.5% 2.1% 2.0% Hourly (Non-exempt) Mean 1.7% 1.3% 1.7% 1.6% Median 2.1% 1.7% 2.1% 2.1% Hourly (Union) Mean 1.2% 1.1% 1.4% 1.3% Median 0.9% 0.9% 1.2% 1.0% Base * Includes zeros (i.e., no adjustments) Compensation Practices 12

14 Compensation Philosophy What is your organization s total compensation philosophy? Non-Profit Industry Base = 98 All Industries Base = 778 Compensation Practices 13

15 Polling Question #2 How effective are the performance management practices at your organization? Very effective Somewhat effective Hardly effective at all! We don t have a performance management system Compensation Practices 14

16 Pay for Performance A desire to incent performance is among the top factors impacting organizations total compensation decisions in Therefore, it is not surprising that 52 percent of organizations have implemented some type of pay-for-performance program. Have you implemented any pay-for-performance programs within your organization? Base = 773 Base = 93 Compensation Practices 15

17 Pay for Performance The gap between salary increases administered to high and low performers continues to widen and increased by 1.2 percent of base pay compared to a year earlier. In general, please indicate the average base salary increases in 2012 for each of the following categories. Base = 646 Base = 84 Compensation Practices 16

18 Polling Question #3 Would you say the variable compensation arrangements in place at your organization are more akin to bonuses or after the fact or incentives before the fact formula driven We don t currently offer variable compensation Compensation Practices 17

19 Incentive Plans Eligibility for short-term and long-term incentive pay is substantially higher for executives and salaried-exempt management than for hourly non-exempt workers. Which employee groups are eligible to participate in a short-term and/or long-term incentive program? Base = 737 Base = 86 Compensation Practices 18

20 Incentive Plans What is the targeted short-term incentive pay opportunity at your company for 2012? Base = 365 Base = 37 Compensation Practices 19

21 Incentive Plans At the executive level, organization performance is the most common measurement criteria. Performance for exempt employees is typically weighted based on both individual and organization performance. For hourly employees, individual performance is the most common measurement criterion, which allows employees to see a clear line of sight between objectives and rewards. What performance measures are utilized to determine awards? All Industries Non-Profit Organization Performance Division/Department Performance Individual Performance Other Measures Non-Profit Industry Base = 71 All Industries Base = 673 Compensation Practices 20

22 Incentive Plans While most incentive plans are designed to set expectations up front, spot bonuses, which are usually more subjective, are also utilized by 37 percent of responding organizations. Do you offer spot bonuses to provide immediate rewards for performance above and beyond expectations? Base = 744 Base = 92 Compensation Practices 21

23 2012/2013 Compensation, Retirement and Benefits Trends Report HEALTH AND WELFARE BENEFITS 2012/2013 Compensation, Retirement and Benefits Trends Report 22

24 Health Insurance Options Preferred Provider Organization (PPO) plans are still by far the most widely available health plan option. For the first time, High Deductible Health Plans (HDHPs) edged out Health Maintenance Organizations (HMOs) as the second-most prevalent type of health plan. Which of the following plans do you offer as health insurance options? Non-Profit Industry Base = 90 All Industries Base = 766 Health and Welfare Benefits 23

25 Health Insurance Options For employees, PPOs still remain the most frequently selected health plan followed by HMOs. HDHPs are a distant third. For 2012, which of the following health insurance options was selected by the largest number of employees? Base = 355 Base = 39 Health and Welfare Benefits 24

26 Health Insurance Plan Costs One-third of organizations say that their health plan costs increased by at least 8 percent from 2011 to 2012, more than double the 3 percent rise in the Consumer Price Index over the same period. What was the average percentage change in your health insurance plan costs for the 2012 plan year? Base = 698 Base = 83 Health and Welfare Benefits 25

27 Health Insurance Premiums For companies overall, the average monthly premium for family coverage edged up to $1,252 for 2012, with employees contributing a historically high 36 percent of the cost. For the health insurance option selected by the majority of your employees, what is your average total premium amount? What percentage do your employees contribute to the premium amount? All Industries Not-For-Profit Average Monthly Premium Family $1,252 $1,390 Employee + One (Spouse or Child) $940 $1,164 Employee + Children $889 $886 Employee Only $539 $627 Base Employee Share of Premium Family 36% 36% Employee + One (Spouse or Child) 35% 35% Employee + Children 33% 33% Employee Only 22% 18% Base Health and Welfare Benefits 26

28 Actions to Reduce Healthcare Costs Nearly 60 percent of employers indicate they are taking measures in 2012 to reduce healthcare expenses. Once again, the most frequently cited action is raising the employee portion of the premium. What actions were taken for 2012 in your organization to address healthcare costs? Non-Profit Industry Base = 73 All Industries Base = 624 Health and Welfare Benefits 27

29 Actions to Reduce Healthcare Costs Many companies intend to shift an even greater percentage of the cost of healthcare to their employees in What actions do you plan to take for 2013 in your organization to address healthcare costs? All Industries Base = 547 Non-Profit Industry Base = 68 Health and Welfare Benefits 28

30 Healthcare Reform Currently 26 percent of employers are undecided on whether they will continue or discontinue group health coverage in the next 24 months. Due to healthcare reform, which action are you most likely to take in the next 24 months? Base = 686 Base = 82 Health and Welfare Benefits 29

31 Polling Question #4 In light of the Pay or Play healthcare reform provisions, what action is your organization likely to take? Continue current group health care coverage Discontinue health plan & use state health exchange Undecided Compensation Practices 30

32 Healthcare Reform More than three-quarters of employers claim cost is the most important factor in determining how they will respond to healthcare reform. What factors are most important in determining how you will respond to healthcare reform? Non-Profit Industry Base = 83 All Industries Base = 689 Health and Welfare Benefits 31

33 Other Benefits In addition to health insurance, organizations generally offer a broad range of benefits including dental insurance, life insurance, long-term disability, short-term disability and vision insurance. Which of the following benefits do you currently offer? Non-Profit Industry Base = 85 All Industries Base = 689 Health and Welfare Benefits 32

34 Other Benefits To help combat health insurance costs, employers are increasing their focus on wellness programs. Please indicate which benefits you plan to improve in the upcoming year? Non-Profit Industry Base = 16** *Caution low base **Extremely low base Health and Welfare Benefits All Industries Base =

35 Polling Question #5 How effective have the wellness programs at your organization positively impacting your health care costs? Very effective (has helped reduce medical trend) Somewhat effective (has helped keep our medical trend flat) I don t know the impact on our health care costs We do not have a wellness program Compensation Practices 34

36 2012/2013 Compensation, Retirement and Benefits Trends Report RETIREMENT PLANS 2012/2013 Compensation, Retirement and Benefits Trends Report 35

37 Polling Question #6 What type of retirement plan does your organization provide? 403(b)/401(k) (Defined contribution plan(s) w/employee contribs) Defined contribution plan with employer contributions only Defined benefit plan (non-frozen plan) Combination defined benefit & defined contribution plans No retirement plan Retirement Plans 36

38 Retirement Plan Types Defined contribution plans continue to be the dominant retirement savings program across U.S. companies, regardless of company size. What type of retirement plan(s) do you offer? Non-Profit Industry Base = 97 All Industries Base = 799 Retirement Plans 37

39 Criteria for Choosing Providers Managing plan costs continues to be an important issue for most employers. The cost of investments and the cost of services, including plan fees, continue to be key considerations when evaluating retirement plan offerings, regardless of size or industry. Identify the top three items from the following list that you consider most important when evaluating your retirement plan offering. Non-Profit Industry Base = 89 All Industries Base = 727 Retirement Plans 38

40 Investment Options As employers strive to attain appropriate investment diversification without overwhelming their participants, providing choices to employees remains paramount. How many investment options are participants able to choose from in your plan, excluding brokerage windows? Base = 724 Base = 86 Retirement Plans 39

41 Investment Options Default Please indicate your Qualified Default Investment Alternative (QDIA). All Industries Non-Profit Industry Cash Money Market 30% 33% Stable Value 17% 14% Asset Allocation Target Date 44% 52% Balanced 13% 10% Managed Investment Accounts/Model Portfolios 12% 12% Lifestyle 9% 0% Base Retirement Plans 40

42 Automatic Enrollment More than one-third of organizations offer automatic enrollment. This suggests that auto-enrollment is here to stay, as companies strive to secure and retain plan participants. Among organizations that offer automatic enrollment, 31 percent include an automatic escalation feature. Does your plan have an automatic enrollment feature? Yes 31% Base = 750 Base = 91 *Caution low base **Extremely low base Retirement Plans 41

43 Automatic Enrollment More than one-third of organizations offer automatic enrollment. This suggests that auto-enrollment is here to stay, as companies strive to secure and retain plan participants. Among organizations that offer automatic enrollment, 31 percent include an automatic escalation feature. If yes, does your plan include an automatic escalation feature? Yes 31% Base = 280 Base = 38* *Caution low base **Extremely low base Retirement Plans 42

44 Polling Question #7 What type of employer contribution does your organization provide to employees under your retirement plan? Match Non-match employer contributions Combination match and non-match Defined benefit contribution No employer contribution Retirement Plans 43

45 Employer Plan Contributions Most employers embrace matching contributions as an effective inducement to plan participation. Most common is a 100 percent match of employee contributions followed closely by a 50 percent match. Does your company offer matching contributions? Base = 706 Base = 85 Retirement Plans 44

46 Employer Plan Contributions Most employers embrace matching contributions as an effective inducement to plan participation. Most common is a 100 percent match of employee contributions followed closely by a 50 percent match. Please provide the matching percentages your company currently contributes. Non-Profit Industry Base = 60 All Industries Base = 510 Retirement Plans 45

47 Plan Costs and Participant Awareness Disclosures are on the forefront of plan sponsors minds with 98 percent confirming receipt from their plan service providers. Did you receive a disclosure from all of your plan service providers regarding plan fees? Base = 643 Base = 75 Retirement Plans 46

48 Plan Costs and Participant Awareness Disclosures are on the forefront of plan sponsors minds with 98 percent confirming receipt from their plan service providers. After reviewing fee disclosures from service providers, do you know the total cost of your plan? Base = 643 Base = 75 Retirement Plans 47

49 Plan Costs and Participant Awareness Despite the survey launching in the midst of the participant disclosure delivery, 91 percent of employers affirm that plan participants are provided with information necessary to understand the full cost of the plan. Are plan participants provided with information necessary to understand the full cost of the plan? Base = 678 Base = 81 Retirement Plans 48

50 Thank You for Attending Questions/contact us Download the complete report rementandbenefitstrends.aspx Join us for the next web seminar: Cash Balance Plans Maximizing Retirement Assets and Minimizing Your Tax Burden Wednesday, September 18, 2013 Register for the web seminar by visiting the Plan Sponsor or Advisor login pages at 49