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The Principal Financial Well-Being IndexSM Employee Questions - Fourth Quarter 2006

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Benefit Programs Offered at Businesses with 10 to 1,000 Employees

The top benefits offered at firms with 10 to 1,000 employees are Health Insurance (93%), Defined Contribution Plans (73%), Life Insurance (71%), Free Parking (62%) and Disability Insurance (49%). In table 14 below, comparisons can be made with the previous year's benefit offerings. There are some significant differences between responses from this most recent quarter and 4th quarter 2005 - indicated with "SIG" below.

Table 14 - Benefits Offered

"What types of benefit programs (excluding vacation and holidays) does your company currently offer you? Please select all that apply."
Base: 1197 employed U.S. adults in firms of 10-1,000 employees

Benefits Overall 2006 Overall 2005 Overall 2004
Health Insurance 93%SIG 88% 89%
Defined Contribution 73%SIG 64% 72%
Life Insurance 71%SIG 65% 63%
Free Parking 62%SIG 57% 59%
Disability Insurance 49% 48% 53%
Tuition Reimbursement 32% 30% 34%
Flex-time 28% 26% 28%
Profit-Sharing/Bonus 23% 26% 28%
Pension - Defined Benefit 19% 22% 20%
Stock Options 7%SIG 11% 10%
Financial Planning 7%SIG 10% 10%
Personal Banking Services 7% 8% 7%
Legal Services 7% 7% 8%
Other 5% 5% 4%
Child Care Subsidies 4% 4% 3%
On-site Daycare 2% 3% 2%
Executive Benefits 1%SIG 4% 5%
N=1197 N= 1,213 N=1,736

SIG = Significant at the 95% confidence level

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 (rating of 8-10 on a 10 point scale) with their Defined Benefit Plan (64%), Defined Contribution Plan, (54%), Life Insurance (52%), Disability Insurance (51%) and Profit Sharing/Bonus (50%). In comparing this quarter's results with the previous year, there are significant increases in satisfaction levels for Life Insurance and Profit sharing/Bonus plans.

Table 15

"Please indicate how satisfied you are with each benefit program." (rating of 8, 9 or 10 on a 10 point scale)
Base: Respondents with each particular benefit

Benefits Satisfaction
Top 3 Box
2006
Satisfaction
Top 3 Box
2005
Satisfaction
Top 3 Box
2004
Pension - Defined Benefit 64% 62% 64%
Defined Contribution 54% 54% 55%
Life Insurance 52%SIG 45% 51%
Disability Insurance 51% 48% 50%
Profit-Sharing/Bonus 50%SIG 41% 52%
Health Insurance 47% 44% 45%
Stock Options 44% 46% 53%

SIG = Significant at the 95% confidence level

Benefit Importance

All employee respondents were asked to rate a group of benefits in terms of how important it was to them on a 10-point scale with 10 being "Very Important." As seen in Table 16, Defined Contribution has increased significantly in importance and Disability Insurance has declined significantly in importance since 2005.

Table 16

"Please indicate how important each benefit program listed below is to you." (rating of 8, 9 or 10 on a 10 point scale)
Base: 1197 employed U.S. adults in firms of 10-1,000 employees

Benefits Importance
Top 3 Box
2006
Importance
Top 3 Box
2005
Importance
Top 3 Box
2004
Health Insurance 91% 90% 90%
Defined Contribution 75%SIG 71% 75%
Pension - Defined Benefit 53% 55% 51%
Disability Insurance 51%SIG 55% 50%
Life Insurance 50% 51% 46%
Profit-Sharing/Bonus 43% 44% 44%
Stock Options 17% 18% 20%
  N=1197 N=1,213 N=1,736

SIG = Significant at the 95% confidence level

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 25%, followed by Profit Sharing/Bonus and Flex-time, each with 14%. Defined Benefit plans and Flex-time both saw significant increases since 2005.

Table 17

"Which one employee benefit do you most wish that your company would offer you (excluding vacation and holidays)?"
Base: 1197 employed U.S. adults in firms of 10-1,000 employees

Benefits 4 Qtr 2006 4 Qtr 2005
Pension - Defined Benefit Plan 25%SIG 18%
Profit-sharing/bonus 14% 12%
Flex-time 14%SIG 11%
Tuition Reimbursement 8% 6%
Defined Contribution Plan 6%SIG 9%
  N=1197 N=1212

SIG = Significant at the 95% confidence level

Aside from those benefits employees would like to see added to their employer's 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 (43%) and Defined Contribution Plan (17%).

Table 18

"Which one employee benefit (excluding vacation and holidays) do you most wish that your company would improve upon?"
Base: 1197 employed U.S. adults in firms of 10-1,000 employees

Benefits 4 Qtr 2006 4 Qtr 2005
Health Insurance 43% 45%
Defined Contribution Plan 17%SIG 14%
Profit Sharing/Bonus 6% 8%
  N=1197 N=1209

SIG = Significant at the 95% confidence level

Benefits for Recruit & Retention

Firms with 10 to 1,000 employees offer employee benefits to aid in the recruiting and retaining of quality employees. To measure how employees react to the presence of good employee benefits, a series of agree statements were asked. The results have remained relatively unchanged since 2005. - see table 19.

Table 19

"Please indicate the extent to which you agree or disagree with each of the following statements."
Base: 1197 employed U.S. adults in firms of 10-1,000 employees

Trending Comparison
(% of respondents agreeing completely or somewhat)
4th Qtr 2006
EE
4th Qtr 2005
EE
4th Qtr 2004
EE
Having a good employee benefits plan encourages me to work harder and perform better. 67% 65% 70%
Having a good employee benefits plan keeps me working for my current company. 62% 62% 65%
My company is concerned about my long-term financial future. 25% 25% 33%
  N=1197 N=1,213 N=1,736

Job Security

Job security continues to top the importance chart when compared to long-term financial future and challenging work. However, it has declined significantly since last year. The importance of long-term financial future has seen a significant increase from last year, but still not large enough to overtake job security as the item ranked first in importance most often.

Table 20

"Please rank the following items in terms of how important it is to you."
Base: 1197 employed U.S. adults in firms of 10-1,000 employees

Respondent Ranked Item #1 4 Qtr 2006 4 Qtr 2005 4 Qtr 2004
Job Security 45%SIG 52% 47%
Long-Term Financial Future 41%SIG 36% 35%
Challenging Work 14% 12% 19%
  N=1197 N=1,213 N=1,736

SIG = Significant at the 95% confidence level

Workplace Issues

Employees were asked a series of questions about their perceptions of their work and the workplace. Employees were asked why they go to work and the response chosen most often was "to pay the bills" (89%), followed by "because I need the benefits" (64%), and "to save for the future" (51%).

Table 21

"Which of the following describes why you go to work? Please select all that apply."
Base: 1197 employed U.S. adults in firms of 10-1,000 employees

Reason to Work 4 Qtr 2006
EE
2 Qtr 2003
EE
To pay the bills 89%SIG 86%
Because I need the benefits (such as health insurance and retirement ) for me and/or my family 64%SIG 58%
To save for the future 51%SIG 45%
For enjoyment, challenge, or fulfillment 47% 45%
For additional material purchases and to improve my lifestyle 42% 44%
For the camaraderie or social contact 29% 28%
To get out of the house 20%SIG 15%
None of these 1% <1%
  N=1197 N=1216

SIG = Significant at the 95% confidence level

There are several things employees feel their employers could be doing to help them get more out of work. This same question was asked in 2003 and the results have remained fairly consistent. Providing better pay for performance is the item selected by the majority of the employees (73%). Almost half (47%) would like to have better workplace benefits.

Table 22

"Which of the following, if any, could your employer do to help you get more out of work? Please select all that apply."
Base: 1197 employed U.S. adults in firms of 10-1,000 employees

My Employer Could... 4 Qtr 2006
EE
2 Qtr 2003
EE
Provide better pay for my performance 73% 71%
Provide better workplace benefits 47% 45%
Provide more professional development opportunities 36% 34%
Give me opportunity to learn new skills 35%SIG 39%
Ensure better communication with management 32% 35%
Provide more assistance with work/life balance 24% 22%
Provide more networking opportunities 12% 11%
Other 7%SIG 3%
  N=1197 N=1216

SIG = Significant at the 95% confidence level

When asked if the length of their average workweek has changed compared to a year ago, about three out of ten (29%) employees say they are working more this year. Fifty-nine percent say it is about the same.

Table 23

"Compared to this time last year, how has the length of your average workweek changed?"
Base: 1197 employed U.S. adults in firms of 10-1,000 employees

Change in Length of Workweek 4 Qtr 2006
EE
3 Qtr 2004
EE
I am working less this year. 11%SIG 6%
I am working about the same this year. 59%SIG 64%
I am working more this year. 29% 30%
  N=1197 N=1227

SIG = Significant at the 95% confidence level

Three out of five (60%) employees rate their overall level of job satisfaction with their current employer as satisfied or very satisfied. One out of five (20%) employees are neither satisfied nor dissatisfied and the remaining 20% are dissatisfied or very dissatisfied.

Table 24

"What is your overall level of job satisfaction with your current employer?"
Base: 1197 employed U.S. adults in firms of 10-1,000 employees

Level of Job Satisfaction 4 Qtr 2006
EE
Very Satisfied 15%
Satisfied 45%
Neither satisfied nor dissatisfied 20%
Dissatisfied 15%
Very Dissatisfied 5%

Managing Investments

Employees in firms of 10 - 1,000 employees were asked to identify how they prefer to make investment decisions. Over half (54%) prefer to select investment funds/ accounts on their own.
Additionally, those respondents who noted they prefer to have someone manage their investments were also asked if they preferred target date funds handled by a fund manager, target risk funds handled by a fund manager or fee-based financial advisors acting on their behalf. Forty-four percent preferred target risk funds handled by a fund manager. See Table 26 for details.

Table 25

"Which of the following statements best describes how you prefer to make investment choices?"
Base: 1197 employed U.S. adults in firms of 10-1,000 employees

Preferred Choice Method 4 Qtr 2006
EE
I prefer to select investment funds/accounts on my own. 54%
I prefer to have someone manage my investments for me. 35%
Other 11%

Table 26

"Which of the following approaches would you select if you had someone manage your investments for you?"
Base: N=445 employed U.S. adults (based on those who prefer to have someone manage his/her assets)

Managed Investment Choices 4th Qtr. 2006 EE
Select lifecycle/target risk funds that are handled by a fund manager based upon my preferred level of risk (e.g., aggressive, moderate or conservative). 44%
Select lifecycle/target date funds that are handled by a fund manager based upon my estimated retirement year 23%
Select professionally managed accounts - fee-based financial advisor making investment choices on my behalf 24%
None of these 9%

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