Dive Brief:
- A new Willis Towers Watson (WTW) study shows that employers spent on average 70% more on healthcare benefits than retirement benefits in 2015. Costs varied greatly by industry, with retirement benefits showing the most disparity.
- The report, Shifts in benefit allocations among U.S. employers, showed that healthcare is costly across all industries, spanning from 10.4% of pay in the retail industry to 12.7% of pay in the oil, gas and electric (OG&E) industry. The costs of retirement benefits, which include defined contribution (DC), defined benefit (DB) and post-retirement medical programs (PRM), showed the most variation. For example, retirement benefits totaled an average 12% of pay in the OG&E sector, but totaled about 5.5% of pay in the high-tech, healthcare, retail and general services industries.
- Industry plays a large role in defining how benefits dollars are spent, according to WTW senior consultant Debby Moorman. But generally, employers are not spending as much on retirement as they did 15 years ago and are focusing more on healthcare benefits.
Dive Insight:
If anything, the study reveals how each industry differently approaches benefit spend, and could reflect the growing talent shortages present in highly-skilled jobs, particularly in STEM fields like OG&E. Many industries, if not all, have their own talent struggles; while OG&E may be struggling to find people, retail, for example, is struggling to keep them onboard.
Healthcare coverage is a vital benefit, and one that has expanded into various wellness offerings as of late. But employees of all ages also know the importance of investing in a retirement savings plan. Many boomers were caught in the transition employers have been from sponsoring DB plans to offering DC plans, like 401ks. Millennials in particular have outpaced older workers in saving for retirement and even look to their employers for help with managing their plans.
And as employers use phased retirement to help older workers ease into retirement while making way for young people entering the workforce, retirement benefits will be key in that transition.
