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The Principal Financial Well-Being IndexSM Employee Only Questions - Third Quarter 2007

Benefits Offered at Businesses with 10-1,000 employees

The top benefits offered at firms with 10 to 1,000 employees are health insurance (93%), defined contribution plans (75%), dental insurance (75%), life insurance (67%), free parking (59%) and disability insurance (48%). In Table 21 below, comparisons can be made with three previous year's benefit offerings. Significance testing was done between this quarter's results and the most recent year's results. There are few significant differences between responses from this most recent quarter and 3rd quarter 2006 - indicated with "SIG" below. A significantly smaller portion of employees this quarter say they have life insurance through their company than last year at this time.

Table 21
"What types of benefit programs (excluding vacation/holidays) does your company currently offer you?"
Base: 1214 employed U.S. adults in firms of 10-1,000 employees

Company Sponsored
Primary Benefits
3 Qtr 2007 3 Qtr 2006 3 Qtr 2005 3 Qtr 2004
Health Insurance 93% 92% 88% 90%
Defined Contribution Plans 75% 74% 66% 68%
Dental Insurance 75% N/A N/A N/A
Life Insurance 67%SIG 71% 64% 66%
Free Parking 59% 60% 63% 65%
Disability Insurance 48% 47% 51% 55%
Tuition Reimbursement 32% 32% 32% 30%
Flex Time 25% 26% 29% 33%
Profit Sharing/Bonus 21% 23% 23% 25%
Defined Benefit Plans 20% 23% 18% 22%
Financial Planning 9% 7% 10% 11%
Legal Services 8% 7% 9% N/A
Stock Options 7% 8% 6% 8%
Personal Banking Services 7% 7% 7% 8%
Child Care Subsidies 4% 3% 3% 2%
On-site Day Care 4% 3% 3% 2%
Executive Benefits 2% 2% 5% 3%
Other 5% 6% 5% 6%

SIG—varies significantly (95% level) from previous results employee comparison

Benefit Satisfaction

Upon identifying what benefits they are offered through their employer, employees were asked to rate their satisfaction with some of the major benefits. Employees are most satisfied with their Defined Benefit Plan (64%), Defined Contribution plan (55%), Disability insurance (55%) and Profit Sharing/Bonus (54%). In comparing this quarter's results with the previous year, there was a significant increase in satisfaction for stock options.

Table 22
"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 their satisfaction a 8, 9 or 10.
Base: varies by benefit offered by employer

Satisfaction with Benefit 3 Qtr 2007 3 Qtr 2006 3 Qtr 2005 3 Qtr 2004
Defined Benefit Plans (N=261) 64% 56% 54% 53%
Defined Contribution Plans (N=911) 55% 52% 50% 53%
Disability Insurance (N=593) 55% 50% 44% 43%
Profit Sharing/Bonus (N=261) 54% 47% 53% 44%
Life Insurance (N=844) 52% 50% 47% 45%
Stock Options (N=80) 51%SIG 34% 34% 37%
Health Insurance (N=1149) 48% 47% 40% 40%
Dental Insurance (N=930) 46% N/A N/A N/A

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." Health Insurance topped the list with nearly 9 out of 10 employees rating this as at least an "8" in terms of importance. Disability Insurance, Life Insurance and Stock Options were rated as significantly more important this year than last year at this time.

Table 23
"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 a 8, 9 or 10.
Base: 1214 employed U.S. adults in firms of 10-1,000 employees

How important are each benefit program 3 Qtr 2007 3 Qtr 2006 3 Qtr 2005 3 Qtr 2004
Health Insurance 89% 88% 90% 89%
Defined Contribution Plans 68% 70% 66% 68%
Dental Insurance 68% N/A N/A N/A
Defined Benefit Plans 51% 51% 50% 54%
Disability Insurance 54%SIG 49% 49% 51%
Life Insurance 50%SIG 46% 44% 46%
Profit Sharing/Bonus 38% 36% 38% 39%
Stock Options 18%SIG 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 employer to offer, aside from those already offered. Defined benefit plans top the list with 18%, followed by Profit Sharing/Bonus and Flex Time, each with 15%. While Defined Benefit plans are still the benefit that most people wish their company would include, it has had a significant decrease since 2006.

Table 24
"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 2007 3 Qtr 2006 3 Qtr 2005
1 Defined Benefit plan 18%SIG 24% 25%
2 Profit Sharing/Bonus 15% 13% 15%
2 Flex Time- Flexible Work Schedule 15%SIG 12% 11%
3 Tuition Reimbursement 7% 8% 8%
4 Defined Contribution Plan 6% 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 (44%) and Defined Contribution plans (17%). See Table 25 for a listing of the top six benefits selected.

Table 25
"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 2007 3 Qtr 2006 3 Qtr 2005
Health Insurance 44% 41% 47%
Defined Contribution Plan 17% 19% 16%
Profit Sharing/Bonus Plan 5% 5% 5%
Defined Benefit Plan 4%SIG 7% 3%
Life Insurance 3% 3% 2%
Tuition Reimbursement 5%SIG 3% 3%

SIG – varies significantly (95% level) from previous results employee comparison

401(k) Deferral

Eighty-four percent of employees who are eligible to participate in a defined contribution plan say they are currently participating. 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 27, 16% of all eligible employees said they don't currently defer any of their salary. Thirty-one percent contribute 1-5% of their salary. Thirty-one percent contribute 6 to 10% of their salary. Eleven percent contribute 11% of their salary or more.

Table 28 shows the percentages employees feel they should be deferring so they could be comfortable in retirement. Forty-two percent feel they should be deferring 11% or more. That's very different than the 11% who actually are deferring 11% or more currently.

Table 26
"Are you currently participating in your defined contribution plan (such as a 401(k) plan, etc.)?"
Base: 911 employed U.S. adults in firms of 10-1,000 employees who are eligible to participate

Currently participating 3 Qtr 2007
EE
Yes 84%
No 16%
  N=911

Table 27
"How much of your annual pre-tax salary do you currently defer to your 401(k) retirement plan?"
Base: 911 employed U.S. adults in firms of 10-1,000 employees that are eligible to participate

Amount of Deferral 3 Qtr 2007 3 Qtr 2006 3 Qtr 2004
1% 1% 2% 4%
2% 4%SIG 2% 4%
3% 12%SIG 99% 11%
4% 5% 5% 6%
5% 9% 11% 13%
6% 11% 10% 10%
7% 4% 3% 2%
8% 4% 3% 4%
9% 1% 1% 1%
10% 11% 13% 12%
11% to 15% 7% 8% 7%
16% or more 4% 4% 4%
Not Sure 11%SIG 7% 4%
Don't currently defer 16% 21% 18%
  N=911 N=1003 N=707

SIG – varies significantly (95% level) from previous results employee comparison

Table 28
"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: 911 employed U.S. adults in firms of 10-1,000 employees that are eligible to participate

Amount of Deferral 3 Qtr 2007 3 Qtr 2006
1% or less 4%SIG 1%
2% < 1% 1%
3% 2% < 1%
4% 2% 1%
5% 9%SIG 4%
6% 6%SIG 4%
7% 3% 2%
8% 2%SIG 4%
9% 1% 1%
10% 28%SIG 34%
11% - 15% 21%SIG 17%
16% or more 21%SIG 30%
  N=911 N=1003

SIG – varies significantly (95% level) from previous results employee comparison

Reduced Participation

A significantly smaller percentage of employees have reduced contributions or stopped participating in their defined contribution plans since the last time this question was asked in 1st quarter of 2003. The main reason for reducing or stopping contributions is because they have more immediate financial needs.

Table 29
"Within the past 6 months, have you reduced your retirement plan contributions or stopped participating in your company sponsored retirement plan?"

Respondents who participate in the employer sponsored plan

Participation 3 Qtr 2007
EE
3 Qtr 2003
EE
Yes 5%SIG 9%
No 95%SIG 91%
  N=771 N=903

SIG - varies significantly (95% level) from previous results employee comparison

Table 30
"Why did you reduce your retirement plan contributions or stop participating?" Please select all that apply.

Respondents who have reduced contributions or stopped participating

Participation 3 Qtr 2007
EE
1 Qtr 2003
EE
Have more immediate financial needs 57% 56%
Worry about U.S. war with Iraq* 8% 11%
No company match 4% 20%
Not happy with my current rate of return 3% 38%
Worry about economy 2% 33%
Don't understand the plan; it's too complex 0% 0%
Other 31% 28%
  N=35 N=78

*In 2003, question wording asked "worry about possible war with Iraq" Note: due to small sample size data should be used directionally

No Participation

Respondents who are not participating in their employer sponsored retirement plans say the main reason is because they lack the financial resources to contribute to the plan (43%).

Table 31
"What are the main reasons you are not participating in your company's retirement plan?" Please select all that apply.

Participation 3 Qtr 2007 EE
I lack the financial resources to contribute to the plan. 43%
I'm not eligible for the plan. 15%
I'm too close to retirement. 14%
I do not understand how the plan works. 13%
I'm saving for other short-term goals. 9%
I'm too uncomfortable about investing. 8%
I do not know how to enroll. 6%
I'm too young to be concerned. 1%
Other 20%
  N=140

Payroll Deduction Savings Plan

Employees were asked what their primary reason would be for participating in a payroll deduction savings plan. The majority of employees (53%) said they would save for retirement. Only nine percent of the employees said they would not participate if it were offered by their employer.

However, when asked which of a list of financial products they would most likely choose for their payroll deduction savings plan, 19% of employees said they would not participate. The financial products selected most frequently were IRA's (39%) and mutual funds (22%). This same question was asked in 1st quarter of 2003 and the results were very similar.

Table 33
" If your employer were to offer a payroll deduction savings plan - aside from your current retirement plan-what would be your primary reason for participating in the additional plan?"

Participating 3 Qtr 2007
EE
Save for retirement 53%
Save for a new home 10%
Save for college 9%
Save for home expenses (furniture, remodeling, etc.) 8%
Other 3%
Not Sure 7%
I would not participate 9%
  N=1214

Table 34
"If your employer were to offer a payroll deduction savings plan - aside from your current retirement plan-which of the following financial products would you most likely choose?"

Most likely choose 3 Qtr 2007
EE
1 Qtr 2003
EE
IRAs (Individual Retirement Accounts) 39% 38%
Mutual Funds 22% 20%
529 College Savings Plan 10% SIG 13%
Annuities 7% 6%
Other 4% SIG 4%
I would not want to participate 19% 19%
  N=1214 N=1511

SIG – varies significantly (95% level) from previous results employee comparison

Adequate Amount of Life Insurance

Employees were asked what they feel is an adequate amount of life insurance for themselves. One-fourth of the employees (26%) are not sure. Six percent don't feel that they need any life insurance. Almost half (45%) feel that they need two or five times their salary.

Table 35
"What is an adequate amount of life insurance for you personally?"

Adequate amount 3 Qtr 2007
EE
Two times my salary 17%
Five times my salary 28%
Ten times my salary 16%
More than ten times my salary 7%
Not sure 26%
None, I do not need life insurance 6%
  N=1214

Charitable Donations in the Workplace

Just over half (55%) of the employees said they either participate or would participate in charitable donations at work. Twenty-nine percent are currently participating and another 26% said they would if their company encouraged it. The other 45% either don't participate even though their company encourages it (18%) or would not participate if the company did encourage it (27%).

There were some gender differences in charitable giving at work. Females (36%) are more likely to participate in charitable giving at work if encouraged by their employer males (23%). Furthermore, males (32%) are more likely to say they would not participate even if their employer encouraged it than females (21%).

Table 36
"Does your employer encourage charitable donations with its employees?"

Employer encourage 3 Qtr 2007
EE
Yes, my employer encourages charitable donations within the workplace, and I participate. 29%
Yes, my employer encourages charitable donations within the workplace, but I do not participate. 18%
No, my employer does not encourage charitable donations within the workplace, but I would participate if my company did. 26%
No, my employer does not encourage charitable donations within the workplace, and I would not participate if it did. 27%
  N=1214

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