The Principal Financial Well-Being IndexSM Employee Questions - Third Quarter 2006
Benefits Offered at Businesses with 10 to 1,000 Employees
The top benefits offered at firms with 10 to 1,000 employees are health insurance (92%), defined contribution plans (74%), life insurance (71%), free parking (60%) and disability insurance (47%). In table 18 below, comparisons can be made with 2 previous year's benefit offerings. Significance testing was done between this quarter's results and the most previous year's results. There are significant differences between responses from this most recent quarter and 3rd quarter 2005 - indicated with "SIG" below. A significantly larger portion of employees this quarter say they have health insurance, defined contribution plans, life insurance and defined benefit plans than last year at this time.
Table 18
"What types of benefit programs (excluding vacation/holidays) does your company currently offer you?"
Base: 1360 employed U.S. adults in firms of 10-1,000 employees
| Company Sponsored Primary Benefits |
3 Qtr 2006 | 3 Qtr 2005 | 3 Qtr 2004 |
| Health Insurance | 92%SIG | 88% | 90% |
| Defined Contribution Plans | 74%SIG | 66% | 68% |
| Life Insurance | 71%SIG | 64% | 66% |
| Free Parking | 60% | 63% | 65% |
| Disability Insurance | 47%SIG | 51% | 55% |
| Tuition Reimbursement | 32% | 32% | 30% |
| Flex Time | 26% | 29% | 33% |
| Profit Sharing/Bonus | 23% | 23% | 25% |
| Defined Benefit Plans | 23%SIG | 18% | 22% |
| Stock Options | 8% | 6% | 8% |
| Personal Banking Services | 7% | 7% | 8% |
| Legal Services | 7% | 9% | N/A |
| Financial Planning | 7%SIG | 10% | 11% |
| Child Care Subsidies | 3% | 3% | 2% |
| Executive Benefits | 2%SIG | 5% | 3% |
| On-site Day Care | 2% | 3% | 2% |
| Other | 6% | 5% | 6% |
SIG - varies significantly (95% level) from previous results employee comparison
Benefit Satisfaction
Upon identifying what benefits they are offered through their employers, employees were asked to rate their satisfaction with some of the major benefits. Employees are most satisfied with their Defined Benefit Plan (56%), Defined Contribution plan (52%), Disability insurance (50%) and Life Insurance (50%). In comparing this quarter's results with the previous year, there are significant increases in satisfaction levels for disability insurance and health insurance.
Table 19
"Although you may have mentioned more than appear below, you indicated that you have the following benefit program(s) through your company. Using a scale from "1" to "10", where "1" means Not At All Satisfied and "10" means Very Satisfied, please indicate how satisfied you are with each benefit program."
Percentages included in chart represent those rating satisfaction as an 8, 9 or 10.
Base: varies by benefit offered by employer
| Satisfaction with Benefit | 3 Qtr 2006 | 3 Qtr 2005 | 3 Qtr 2004 |
| Defined Benefit Plans (N=324) | 56% | 54% | 53% |
| Defined Contribution Plans (N=1003) | 52% | 50% | 53% |
| Disability Insurance (N=678) | 50%SIG | 44% | 43% |
| Life Insurance (N=997) | 50% | 47% | 45% |
| Profit Sharing/Bonus (N=298) | 47% | 53% | 44% |
| Health Insurance (N=1286) | 47%SIG | 40% | 40% |
| Stock Options (N=81) | 34% | 34% | 37% |
SIG - varies significantly (95% level) from previous results employee comparison
Benefit Importance
All employee respondents were asked to rate a group of benefits in terms of how important each was to them on a 10-point scale with 10 being "Very Important." Defined Contribution plans were rated as significantly more important this year than last year at this time.
Table 20
"Using a scale from "1" to "10", where "1" means Not At All Important and "10" means Very Important, please indicate how important each benefit program is to you."
Percentages included in chart represent those rating importance as an 8, 9 or 10.
Base: 1360 employed U.S. adults in firms of 10-1,000 employees
| Benefit Program Importance | 3 Qtr 2006 |
3 Qtr 2005 | 3 Qtr 2004 |
| Health Insurance | 88% | 90% | 89% |
| Defined Contribution Plans | 70%SIG | 66% | 68% |
| Defined Benefit Plans | 51% | 50% | 54% |
| Disability Insurance | 49% | 49% | 51% |
| Life Insurance | 46% | 44% | 46% |
| Profit Sharing/Bonus | 36% | 38% | 39% |
| Stock Options | 12% | 13% | 14% |
SIG - varies significantly (95% level) from previous results employee comparison
Each employee respondent was asked to identify what benefits they would most like their employers to offer, aside from those already offered. Defined benefit plans top the list with 24%, followed by Profit Sharing/Bonus with 13%. There were no significant changes from last year at this time.
Table 21
"Which one employee benefit do you most wish that your company would offer you (excluding vacation and holidays)?"
Base: varies by benefit not offered by employer
| Ranking | Benefits | 3 Qtr 2006 | 3 Qtr 2005 |
| 1 | Defined Benefit plan | 24% | 25% |
| 2 | Profit Sharing/Bonus | 13% | 15% |
| 3 | Flex Time- Flexible Work Schedule | 12% | 11% |
| 4 | Tuition Reimbursement | 8% | 8% |
| 5 | Defined Contribution Plan | 7% | 8% |
SIG - varies significantly (95% level) from previous results employee comparison
Aside from those benefits employees would like to see added to their employers' benefit programs, they were also asked to identify what benefits they would like to have improved upon. The top two benefits mentioned are Health Insurance (41%) and Defined Contribution plans (19%). See table 22 for additional detail.
Table 22
"Which one employee benefit (excluding vacation and holidays) do you most wish that your company would improve upon?"
Base: varies by benefit offered by employer
| Benefits | 3 Qtr 2006 | 3 Qtr 2005 |
Health Insurance |
41%SIG | 47% |
Defined Contribution Plan |
19%SIG | 16% |
Defined Benefit Plan |
7%SIG | 3% |
Profit Sharing/Bonus Plan |
5% | 5% |
Life Insurance |
3% | 2% |
Flex time-flexible work schedule |
3% | 2% |
Tuition Reimbursement |
3% | 3% |
SIG - varies significantly (95% level) from previous results employee comparison
401(k) Deferral
For employees eligible to participate in the 401(k) plan, they were also asked to identify what percent of their annual salary was being deferred into those plans. As shown in Table 23, one-fifth (21%) of all eligible employees said they don't currently defer any of their salary. Twenty-nine percent contribute 1-5 percent of their salary. Thirty-one percent contribute 6 to 10 percent of their salary. Twelve percent contribute 11 percent of their salary or more.
Table 24 shows the percentages employees feel they should be deferring so they could be comfortable in retirement. Almost half (47%) feel they should be deferring eleven percent or more. That's very different than the twelve percent who actually are deferring eleven percent or more currently.
Table 23
"How much of your annual pre-tax salary do you currently defer to your 401(k) retirement plan?"
Base: 1003 employed U.S. adults in firms of 10-1,000 employees that are eligible to participate
| Amount of Deferral | 3 Qtr 2006 | 3 Qtr 2004 |
| 1% | 2%SIG | 4% |
| 2% | 2%SIG | 4% |
| 3% | 9% | 11% |
| 4% | 5% | 6% |
| 5% | 11% | 13% |
| 6% | 10% | 10% |
| 7% | 3% | 2% |
| 8% | 3% | 4% |
| 9% | 1% | 1% |
| 10% | 13% | 12% |
| 11% to 15% | 8% | 7% |
| 16% or more | 4% | 4% |
| Not Sure | 7%SIG | 4% |
| Don't currently defer | 21% | 18% |
| N=1003 | N=707 |
SIG - varies significantly (95% level) from previous results employee comparison
Table 24
"How much of your annual pre-tax salary do you think you should be deferring to your 401(k) retirement plan to be comfortable in retirement?"
Base: 1003 employed U.S. adults in firms of 10-1,000 employees that are eligible to participate
| Amount of Deferral | 3 Qtr 2006 |
| 1% | 1% |
| 2% | 1% |
| 3% | <1% |
| 4% | 1% |
| 5% | 4% |
| 6% | 4% |
| 7% | 2% |
| 8% | 4% |
| 9% | 1% |
| 10% | 34% |
| 11% - 15% | 17% |
| 16% or more | 30% |
| N=1003 |
Automatic Enrollment
401(k) Automatic Enrollment
Do It For Me Trend - In today's society, people are interested in having others handle their matters for them rather than doing it themselves. This is also true related to retirement planning and investments and the trend has been labeled "do it for me." To examine this trend in the 10 to 1,000 employee marketplace, employees were asked to answer a variety of questions related to this trend.
Automatic enrollment is a program that some employers put into place to aid in retirement plan participation and to encourage employees to save for the future. In automatic enrollment, the employer enrolls all eligible employees into their retirement plan and starts the deferral process by imposing a minimum deferral rate, usually between 1 and 3% of annual salary. To identify what the penetration of automatic enrollment is, employees were asked if their employer had automatic enrollment - 19% offer it. Table 25 shows the penetration of automatic enrollment by firm size. Firms of 10-50 employees are significantly more likely to auto enroll than firms of 501-1000 employees.
Table 25 - Presence of Automatic Enrollment - 10-1,000 Employee Firms
"Does your employer automatically enroll all employees in their 401(k) retirement plan with a set deferral rate percentage (e.g. 1-3% of annual salary)?"
Base: 1003 employed U.S. adults in firms of 10-1,000 employees
| Employer Automatic Enrollment | 3rd Qtr 2006 Total | 3rd Qtr. 2005 Total |
3rd Qtr. 2004 Total |
2006 Firm Size | ||||
| 10-50 | 51-100 | 101-200 | 201-500 | 501-1,000 | ||||
| Automatic Enrollment | 19% | 18% | 18% | 27% | 16% | 17% | 21% | 14% |
| No Automatic Enrollment | 69% | 72% | 72% | 62% | 72% | 76% | 65% | 71% |
| Not Sure | 12%SIG | 9% | 10% | 11% | 12% | 7% | 13% | 15% |
SIG - varies significantly (95% level) from previous results employee comparison
Knowing that 19% of 10-1,000 employee firms currently offer automatic enrollment of employees in their retirement plan, a follow-up question was asked to determine if employees would consider enrolling in a program that would automatically increase their 401(k) deferral rate by 1% each year. Over half (52%) of the employees are willing to consider enrollment in this type of plan and 22% express an unwillingness to do so. Table 26 shows the specific breakdowns.
Table 26 Agree With Automatic Deferral Increases
"Please indicate the extent to which you agree or disagree with the following statement. If offered, I would enroll in a program that would automatically increase my 401(k) deferral rate 1% each year."
Base: 1003 employed U.S. adults in firms of 10-1,000 employees
| Auto Enroll Agreement l | 3rd Qtr 2006 Employee | 3rd Qtr. 2005 Employee | 3rd Qtr. 2004 Employee |
| Completely/Somewhat Agree | 52% | 49% | 46% |
| Neither Agree/Disagree | 25%SIG | 33% | 28% |
| Completely/Somewhat Disagree | 22% | 19% | 26% |
SIG - varies significantly (95% level) from previous results employee comparison
Managing Investments
Employees in firms of 10 - 1,000 employees were asked to identify how they prefer to make investment decisions regarding their retirement plan. Over half (53%) prefer to select investment funds/ accounts on their own. Results were very similar between different age groups. There were significant differences in the percentage of males who prefer to select their own investment funds/accounts when compared to females. Table 27 shows the specific breakdowns.
Additionally, those respondents who noted they prefer to have someone manage their investments were also asked if they preferred lifestyle funds handled by a fund manager or fee-based financial advisors acting on their behalf. Consistent with last year's results, the largest proportion of employees (56%) preferred lifestyle funds. See Table 28 for details.
Table 27 - Investment Choice Preference
"Which of the following statements best describes how you prefer to make investment choices in your company-sponsored retirement plan?"
Base: US Adults age 18+ with a Defined Contribution Plan
| Investment Preferences | 3rd Qtr. 2006 Employee | 3rd Qtr. 2005 Employee |
3rd Qtr. 2004 Employee |
3rd Qtr. 2006 Gender | |
| Male | Female | ||||
I prefer to select investment funds/accounts on my own. |
53% |
55% |
53% |
57% |
48% |
I prefer to have someone manage my investments for me. |
39% |
41% |
42% |
37% |
42% |
Other |
8%SIG |
5% |
5% |
6% |
10% |
SIG - varies significantly (95% level) from previous results employee comparison
Table 28 - Investment Choice Preference
"Which of the following approaches would you select if you had someone manage your company-sponsored retirement plan investments for you?"
Base: Employees who prefer to have someone manage his/her investments
| Managed Investment Choices | 3rd Qtr. 2006 Employee | 3rd Qtr. 2005 Employee | 3rd Qtr. 2004 Employee |
| Select lifestyle/target date funds that are handled by a fund manager based upon my estimated retirement year | 56% | 55% | 52% |
| Select professionally managed accounts - fee-based financial advisor making investment choices on your behalf | 26%SIG | 36% | 27% |
| Neither of these | 18%SIG | 10% | 21% |
| N=397 | N=320 | N=359 |
SIG - varies significantly (95% level) from previous results employee comparison
Dealing with Employee Benefits Issues in the Workplace
Employees were asked how often they have to take some time at work to deal with employee benefits. Males are significantly more likely than females to deal with employee benefits at the work place at least once a month or at least once every three months. Females are significantly more likely to only deal with them at least once a year. See Table 29 for specific breakdowns.
Table 29
"On average, how often do you take some time at work to deal with your employee benefits?"
Base: 1360 employed U.S. adults in firms of 10-1,000 employees
| Time at work with benefits | 3 Qtr 2006 | 3 Qtr 2006 | |
| Males | Females | ||
| At least once a day | 1% | 2% | 1% |
| At least once a week | 4% | 5% | 3% |
| At least once a month | 16% | 19% | 12% |
| At least once every three months | 17% | 20% | 13% |
| At least once every six months | 19% | 17% | 21% |
| At least once a year | 44% | 37% | 50% |
| N=1360 | N=693 | N=667 | |
Health Savings Accounts
To understand the level of knowledge regarding High Deductible Health Plans and Health Savings Accounts (HSA) employees were given a description of a High Deductible Health Plan and also a Health Savings Account (HSA). They were asked, "Prior to this survey, had you ever heard of a Health Savings Account?" Significantly more employees have heard of an HSA (62% vs. 48%) than when this question was last asked in second quarter of 2005. Also, males are significantly more likely to have heard of an HSA than females (69% vs. 54%). There were no significant differences based on size of firm.
Table 30
"Prior to this survey, had you ever heard of a Health Savings Account?"
Base: 1360 employed U.S. adults in firms of 10-1,000 employees
| Heard of Health Savings Account | 3 Qtr 2006 EE |
2 Qtr 2005 EE |
3 Qtr 2006 EE | |
| Males | Females | |||
| Yes | 62%SIG | 48% | 69% | 54% |
| No | 38%SIG | 52% | 31% | 46% |
| N=1360 | N=1112 | N=693 | N=667 | |
SIG - varies significantly (95% level) from previous results employee comparison
Employees who had heard of a Health Savings Account were asked some follow up questions. One question is whether or not they are currently enrolled in a High Deductible Health Plan with a Health Savings Account. Table 31 shows a relatively small percentage of people are currently enrolled but significantly more than in second quarter 2005.
Table 31
"Are you currently enrolled in a High Deductible Health Plan with a Health Savings Account?"
Base: 910 employed U.S. adults in firms of 10-1,000 employees who have heard of an HSA
| Enrolled in HDHP with HSA | 3 Qtr. 2006 | 2 Qtr 2005 |
| Yes, through my current employer | 14%SIG | 9% |
| Yes, through a source other than my current employer | 3% | 3% |
| No | 84%SIG | 89% |
| N=910 | N=559 |
SIG - varies significantly (95% level) from previous results employee comparison
Respondents who have heard of a Health Savings Account and are not currently enrolled were asked if they had ever considered enrolling. There have been no significant changes since second quarter 2005. Table 32 shows the results.
Table 32
"Have you ever considered enrolling in a High Deductible Health Plan with a Health Savings Account?"
Base: 799 employed U.S. adults in firms of 10-1,000 employees who have heard of an HSA but aren't currently enrolled in one
| Considered HDHP with HSA | 3 Qtr 2006 | 2 Qtr 2005 |
| Yes, my employer currently offers it, but I've decided not to enroll | 8% | 9% |
| Yes, I've looked at options outside my current employer and decided not to enroll | 11% | 11% |
| No, I've never considered it | 81% | 81% |
| N=799 | N=490 |
Respondents who have heard of a Health Savings Account and are not currently enrolled were then asked if they would consider enrolling in the next 12 months. The majority (70%) of respondents are somewhat or very unlikely to enroll within the next 12 months. Table 33 shows the results.
Table 33
"Within the next 12 months, how likely are you to consider enrolling in a High Deductible Health Plan with a Health Savings Account?"
Base: 1360 employed U.S. adults in firms of 10-1,000 employees
| Enrolling in HDHP with HSA in 12 months | 3 Qtr 2006 |
| Very Likely | 4% |
| Somewhat Likely | 6% |
| Neither Likely Nor Unlikely | 20% |
| Somewhat Unlikely | 17% |
| Very Unlikely | 53% |
| N=1360 |
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