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

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 (91%), Defined Contribution Retirement Plans (75%), Dental Insurance (74%), Life Insurance (70%), Free Parking (58%) and Disability Insurance (47%).

In Table 28 below, comparisons can be made with the previous year's benefit offerings. There are some significant differences between responses from the current quarter and 4th quarter 2006—indicated with "SIG" below. There was a significant decline in the percentage of firms offering free parking and flex time.

Table 28—Benefits Offered
"What types of benefit programs (excluding vacation and holidays) does your company currently offer you? Please select all that apply."
Base: 1,154 employed U.S. adults in firms of 10-1,000 employees

Benefits 4th Qtr 2007 4th Qtr 2006 4th Qtr 2005 4th Qtr 2004
Health Insurance 91% 93% 88% 89%
Defined Contribution Retirement Plan 75% 73% 64% 72%
Dental Insurance 74% N/A N/A N/A
Life Insurance 70% 71% 65% 63%
Free Parking 58%SIG 62% 57% 59%
Disability Insurance 47% 49% 48% 53%
Tuition Reimbursement 30% 32% 30% 34%
Flex-time 22%SIG 28% 26% 28%
Profit-Sharing/Bonus 20% 23% 26% 28%
Pension - Defined Benefit 20% 19% 22% 20%
Stock Options 8% 7% 11% 10%
Financial Planning 8% 7% 10% 10%
Personal Banking Services 8% 7% 8% 7%
Other 7%SIG 5% 5% 4%
Legal Services 6% 7% 7% 8%
Child Care Subsidies 5% 4% 4% 3%
On-site Daycare 2% 2% 3% 2%
Executive Benefits 2%SIG 1% 4% 5%
N=1,154 N=1,197 N= 1,213 N=1,736

SIG = varies significantly (95% level) from 2006 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 (rating of 8-10 on a 10 point scale) with their Defined Benefit Plan (63%), Defined Contribution Plan, (58%), Disability Insurance (53%), Life Insurance (50%) and Profit Sharing/Bonus (50%). In comparing this quarter's results with the previous year, there are no significant differences in benefit satisfaction.

Table 29
"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
4th Qtr 2007
Satisfaction
Top 3 Box
4th Qtr 2006
Satisfaction
Top 3 Box
4th Qtr 2005
Satisfaction
Top 3 Box
4th Qtr 2004
Pension - Defined Benefit (N=250) 63% 64% 62% 64%
Defined Contribution Retirement Plan (N=827) 58% 54% 54% 55%
Disability Insurance (N=528) 53% 51% 48% 50%
Life Insurance (N=790) 50% 52% 45% 51%
Profit-Sharing/Bonus (N=208) 50% 50% 41% 52%
Health Insurance (N=1,048) 49% 47% 44% 45%
Stock Options (N=78) 49% 44% 46% 53%
Dental Insurance (N=849) 39% N/A N/A N/A

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 30, Health Insurance, Defined Contribution Retirement Plan, and Dental Insurance are the top 3 benefits in terms of importance to employees.

Table 30
"Please indicate how important each benefit program listed below is to you." (rating of 8, 9 or 10 on a 10 point scale)
Base: 1,154 employed U.S. adults in firms of 10-1,000 employees

Benefits Importance
Top 3 Box
4th Qtr 2007
Importance
Top 3 Box
4th Qtr 2006
Importance
Top 3 Box
4th Qtr 2005
Importance
Top 3 Box
4th Qtr 2004
Health Insurance 89% 91% 90% 90%
Defined Contribution Retirement Plan 75% 75% 71% 75%
Dental Insurance 68% N/A N/A N/A
Pension - Defined Benefit 57% 53% 55% 51%
Disability Insurance 54% 51% 55% 50%
Life Insurance 53% 50% 51% 46%
Profit-Sharing/Bonus 44% 43% 44% 44%
Stock Options 20% 17% 18% 20%
N=1,154 N=1,197 N=1,213 N=1,736

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 21%, followed by Profit Sharing/Bonus (15%) and Flex-time (13%). Defined Benefit Plans saw a significant decrease since 2006.

Table 31
"Which one employee benefit do you most wish that your company would offer you (excluding vacation and holidays)?"
Base: Employees without certain benefits

Benefits 4 Qtr 2007 4 Qtr 2006 4 Qtr 2005
Pension - Defined Benefit Plan 21%SIG 25% 18%
Profit-sharing/bonus 15% 14% 12%
Flex-time 13% 14% 11%
Tuition Reimbursement 7% 8% 6%
Defined Contribution Retirement Plan 7% 6% 9%

N=1,153 N=1,197 N=1,212

SIG = varies significantly (95% level) from 2006 employee comparison

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 (39%) and Defined Contribution Plan (18%). A significantly smaller percentage of employees this year (39%) mentioned health insurance than last year at this time (43%).

Table 32
"Which one employee benefit (excluding vacation and holidays) do you most wish that your company would improve upon?"
Base: 1,154 employed U.S. adults in firms of 10-1,000 employees

Benefits 4 Qtr 2007 4 Qtr 2006 4 Qtr 2005
Health Insurance 39%SIG 43% 45%
Defined Contribution Retirement Plan 18% 17% 14%
Profit Sharing/Bonus 5% 6% 8%

N=1,154 N=1,197 N=1,209

SIG = varies significantly (95% level) from 2006 employee comparison

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. Just over two-thirds (69%) of employees agree that having a good employee benefits plan encourages them to work harder and perform better. Nearly as many (65%) employees agree that having a good employee benefits plan keeps them working for their current company.

Just over a quarter (29%) of employees agree that their company is concerned about their long-term financial future. Employees in companies with 501 to 1,000 employees (40%) are significantly more likely to agree that their company is concerned about their long-term financial future than employees in companies with 10-500 employees (27%).

Table 33
"Please indicate the extent to which you agree or disagree with each of the following statements."
Base: 1,154 employed U.S. adults in firms of 10-1,000 employees

Trending Comparison
(% of respondents agreeing completely or somewhat)
4th Qtr
2007
EE
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. 69% 67% 65% 70%
Having a good employee benefits plan keeps me working for my current company. 65% 62% 62% 65%
My company is concerned about my long-term financial future. 29%SIG 25% 25% 33%

N=1,154 N=1,197 N=1,213 N=1,736

SIG = varies significantly (95% level) from 2006 employee comparison

Health Plan Options

Employees were asked to indicate how many health plan options they have available at their place of employment. Forty-two percent have more than one option available. The percentage of employees (11%) reporting that they have no health plan options available is up significantly from the percentage reported in 2006 (8%).

The bigger the firm, the more likely there are multiple health plan options available. Firms with 10 to 500 employees are significantly more likely than firms with 501 to 1,000 employees to offer no health options or just one option. In contrast, firms with 501 to 1,000 employees are more likely than firms with 10 to 500 employees to offer 3 health plan options or 4 or more health plan options to their employees.

Table 34—Number of Health Plans Offered
"How many health plan options do you have available at your place of employment?"
Base: 1,154 employed U.S. adults in firms of 10-1,000 employees

Health Plan Options 4th Qtr
2007
4th Qtr 2006 4th Qtr
2005
4th Qtr 2007 Employer Firm Size
10 to 500 Employees 501 to 1,000 Employees
None 11%SIG 8% 10% 12%^ 4%
1 option 36% 38% 36% 38%^ 26%
2 options 27% 27% 22% 27% 30%
3 options 10%SIG 13% 13% 8%^ 18%
4 or more options 5% 6% 7% 4%^ 10%
Not sure 11% 9% 12% 11% 12%
N=1,154 N=1,197 N=1,213 N=975 N=179

SIG = varies significantly (95% level) from 2006 employee comparison
^ = varies significantly (95% level) from the other employer firm size category

Ranking of What Motivates Your Decision on Which Plan to Choose

As noted above, 42% of employees in firms with 10-1000 have more than one health plan option to choose from. As a follow-up question, they were asked to identify what motivates them to choose a particular plan option. Table 35 shows what percentage of employees ranked each of the items as number one. Monthly paycheck deduction was ranked first by the largest percentage of employees (25%). Care network (doctors and facilities available within the plan) was also ranked first by nearly a quarter (23%) of the employees.

Table 35—Motivators for Choosing a Health Plan Option
"What motivates your decision on which plan to choose? Please rank your top 3 responses with "1" being the most motivational."
Base: Employed U.S. adults who have more than option to choose from

Health Plan Option Motivator % Ranked #1
2007
% Ranked #1
2006
Monthly paycheck deduction 25% 24%
Care network (doctors and facilities available within the plan) 23%SIG 31%
Deductible/s 18%SIG 10%
Physician office visit co-pay 11% 11%
Benefit limitations and/or exclusions 11% 9%
Estimated health care need for coming year 6% 7%
Emergency visit co-pay 1% 2%
What my colleagues are choosing 1% -
None of these-do not have insurance through my employer - 5%
None of these, I just "pick one" - 1%

N=499 N=546

"-" indicates no responses
SIG = varies significantly (95% level) from 2006 employee comparison

Anticipated Medical Insurance Changes

Employees who are offered health insurance through their employer were asked what they anticipate will happen with their insurance in 2008. Sixty percent expect their premiums will increase, over a third (38%) expect their deductibles will increase, 21% expect their plan options will change, and the same percentage expect that their coverage will be reduced. When compared to the last time this question was asked in 4th quarter of 2003, significantly fewer employees expect to see nearly all of these changes than previously.

Table 36
"Which of the following, if any, do you anticipate will happen to your employer-sponsored medical insurance in 2008? Please select all that apply."
Base: Qualified employees whose employer offers health insurance

Expected in 2008 4 Qtr 2007
EE
4 Qtr 2003
EE
Premiums will increase 60%SIG 70%
Deductibles will increase 38%SIG 45%
Change in medical plan options 21%SIG 42%
Reduction in coverage 21%SIG 34%
Change in medical providers 14%SIG 23%
Employer will drop medical insurance coverage 1% 2%
None of the above 25%SIG 17%
Other 1% 1%
N=1,048 N=1,344

SIG = varies significantly (95% level) from 2003 employee comparison

401(k) Hardship Withdrawal

Only 5% of employees with a company sponsored retirement plan reported taking out a loan against their contributions in the past 6 months. The top reasons for taking such a loan included paying for medical expenses and paying their monthly mortgage.

Table 37
"Within the past 6 months, have you taken out a loan against your company sponsored retirement plan contributions, such as the money in your 401(k) account?"
Base: Employed U.S. adults who have a company sponsored retirement plan

Took a loan out 4 Qtr 2007 EE
Yes 5%
No 95%
N=827

Table 38
"What is the main reason why you have taken out a loan against your company sponsored retirement plan contributions? Please select one."
Base: Employed U.S. adults who have taken out a loan against their company sponsored retirement plan contributions

Reason for loan 4 Qtr 2007
EE
To pay for medical expenses 27%
To pay my monthly mortgage 21%
To pay for home improvements 6%
To purchase a home 4%
To pay for educational related expenses 0%
To pay funeral and/or burial expenses 0%
Other 41%
N=45

Caution: due to small sample sizes data should be used directionally only

Job Security

Employees were asked to rank job security, long-term financial future, and challenging work in order of importance. Job security continues to top the importance chart when compared to long-term financial future and challenging work. Rankings from this quarter are relatively consistent with those obtained in the 4th quarter of 2006.

Table 39
"Please rank the following items in terms of how important it is to you."
Base: 1,154 employed U.S. adults in firms of 10-1,000 employees

Respondent Ranked Item #1 4 Qtr 2007 4 Qtr 2006 4 Qtr 2005 4 Qtr 2004
Job Security 45% 45% 52% 47%
Long-Term Financial Future 42% 41% 36% 35%
Challenging Work 12% 14% 12% 19%
N=1,154 N=1,197 N=1,213 N=1,736

Over a third (37%) of employees expressed some level of concern over their personal job security when asked. This number is up significantly from the second quarter of this year, when only 22% of employees expressed such a concern. Nearly one out of four employees (24%) is making changes in their career as a result of their job insecurities.

When asked what concerns they have about their company in the next year, the most common concern cited was that their company will reduce the number of employees, mentioned by 25% of employees. Just over half of the employees (53%) said none. This percentage is significantly lower than the percentage (61%) who said none in second quarter of 2007.

Table 40
"What is your level of concern with your own, personal job security?"
Base: 1,154 employed U.S. adults

Concern with Personal Job Security 4 Qtr 2007 EE 2 Qtr 2007 EE
Not at all concerned 31%SIG 47%
Somewhat unconcerned 32% 31%
Concerned 25%SIG 14%
Very concerned 8%SIG 5%
Extremely concerned 4% 3%
N=1,154 N=1,137

SIG = varies significantly (95% level) from 2 Qtr 2007 employee comparison

Table 41
"Are your feelings about job security causing you to make any changes in your future career?"
Base: 1,154 employed U.S. adults

Reason for Concern 4 Qtr 2007 EE 2 Qtr 2007 EE

Yes

24% 22%

No

76% 78%

N=1,154 N=1,137

Table 42
"Which of the following concerns do you have about your company in the next year? Please select all that apply."
Base: 1,154 employed U.S. adults

Concerns about company 4 Qtr 2007 EE 2 Qtr 2007 EE
My company will reduce the number of employees. 25% 22%
My company will go out of business. 6% 8%
My company will be acquired by or merge with a larger company. 11%SIG 7%
Other 13% 11%
I have no concerns about the future of my company. 53%SIG 61%
N=1,154 N=1,137

SIG = varies significantly (95% level) from 2 Qtr 2007 employee comparison

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