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The Principal Financial Well-Being IndexSM Executive Summary - First Quarter, 2001

The Principal Financial Well-Being IndexSM Executive Summary First Quarter, 2001

Overview:
Harris Interactive conducted The Principal Financial Well-Being Index during March 2001. This is the second in a series of quarterly studies to identify and track trends in the workplace. The first Index was conducted during November of 2000 and released in January 2001. Harris Interactive was commissioned by The Principal Financial Group, the nation's 401(k) leader, to conduct an online survey of employees of small and mid-sized U.S. businesses (11- 1000 employees) about their attitudes and perceptions regarding their financial well-being and their current employee benefits.

Methodology:
The study was conducted through Harris Interactive's QuickQuery omnibus research product, which is fielded to a random subset of a panel of more than 7 million cooperative respondents via the Internet. More than 1100 full-time employees of small and mid-sized companies (size range: 11 - 1000 employees) were interviewed. Results have been weighted by Harris Interactive to reflect the national small to mid-sized business employee population. This study has a 95% confidence level with a range of error of + 3%.

Comparing First and Second Indices
In order to increase the sample size of the second survey and represent a larger portion of small- and medium-sized businesses, a change was made in the March 2001 Well-Being Index to include employees within businesses with 11 to 1,000 employees. The employees surveyed in the Fourth Quarter, 2000 survey were employed within companies with 11 to 500 employees; however, in this First Quarter 2001 survey, those queried also included those employees of companies ranging in size from 501 to 1,000 employees. The charts that follow note the differences in responses between the two employee groups.

Major Findings

Employee's Financial Future and Well-Being

  • 85% of small and mid-size company employees are concerned about their financial future, up from 74% in fourth quarter 2000.
  • 86% of respondents who indicated that they have retirement savings investments said they have not made changes to how their retirement savings is invested (moving from volatile to more stable investments) as a result of the recent stock market tumble. (This question was added to the latest Index and not asked in the previous one.)
  • 28% of the respondents, overall, agreed with the statement "My company is concerned with my (and my family's) long-term financial future." 33% of employees of companies that employ 11-500 employees agreed with the statement (up 12 points from fourth quarter 2000), while only 21% of those employed by larger firms (501-1,000 employees) did so.
  • 59% of employees, overall, disagree with the following statement, "I am extremely happy with my financial well-being." Respondents of 11-500 employee-sized businesses were up 5 points from fourth quarter 2000.
  • 65% of the respondents think about their financial future at least once a month, up 5 points from fourth quarter 2000. 69% of those employed by firms with between 501 and 1,000 employees think about their future at least once a month.
  • 27% of the respondents in the first quarter 2001 poll agree that they have not yet planned for retirement or security. Fewer respondents of 501-1,000 employee-sized businesses agree to have not yet planned for retirement, 19%.
  • Similar to the fourth quarter 2000, when asked to rank the overall importance of the following three things, respondents ranked job security first (42%), their long-term financial future second (37%), and challenging work ranked much lower (21%).
  • 42% of the respondents are "not at all concerned" and 23% are only "somewhat concerned" that their benefits package may be scaled back due to the economic slowdown (this question was added to the latest Index and not asked in the previous one). Attitudes to this question varied significantly depending on the size of the employer. For instance, whereas 51% of employees working for companies with between 11 and 500 employees said they were "not all that concerned," only 27% of their counterparts from larger companies, said they were "not all concerned."

Employee's Attitudes Towards Benefits

  • Health insurance remains the most common benefit small and mid-size companies offer to their employees (89%). Defined contribution plans came in second at 76%. Health insurance and defined contribution plans were also ranked as the two most important benefits to employees.
  • Health insurance and defined contribution plans were also ranked as the benefits employees wish their company would most improve. 40% of the respondents wished for healthcare plan improvements (up 15 points from fourth quarter 2000 for respondents in 11-500 employee-sized businesses) and 25% wished for defined contribution plan improvements (up 3 points from fourth quarter 2000 for respondents in 11-500 employee-sized businesses).
  • Ranking on a scale of 1 to 10 with 10 being very satisfied and 1 being not satisfied at all, employees were most satisfied with their defined benefit plans, with an average ranking number of 7.5. This ranking was essentially the same as the fourth quarter 2000. However, employees also gave an average ranking of 6.4 to their defined contribution, down almost half a point from fourth quarter 2000.
  • The top-ranking additional benefits employees wanted their companies to offer are defined benefit plans (24%) and profit sharing/bonuses (13%).
  • Similar to fourth quarter 2000, 75% of the respondents agreed with the statement "having a good benefits plan would keep me working for my current company."
  • 33% said they use the Internet to access their retirement plan information and another 9% said they use the Internet to make online transactions on their retirement plan. 55% of respondents said the Internet gave them a greater sense of control or confidence in helping to meet their financial goals.

Detail of Major Findings

Employee Attitudes Toward Benefits

1. Types of employee benefit programs that current company offers:

Fourth Quarter 2000

First Quarter 2001

10-499

11-1,000

11-500

501-1,000

Health Insurance

77%

89%

89%

89%

Free Parking

70%

61%

56%

69%

Defined Contribution Plans (401(k), etc)

63%

76%

70%

87%

Life Insurance

58%

67%

56%

87%

Disability Insurance

48%

55%

46%

72%

Defined Benefit Plan - Pension

33%

32%

30%

36%

Flex Time

25%

33%

28%

41%

Tuition Reimbursement

25%

42%

30%

61%

Profit Sharing/Bonus

19%

25%

18%

37%

Stock Options

14%

15%

9%

27%

Child Care Subsidies

4%

8%

1%

20%

On-site Day Care

2%

2%

1%

4%

Other

6%

10%

7%

16%

None

7%

3%

3%

2%

2. Average satisfaction level with current employee benefits (scale of 1 to 10; 10 being very satisfied, 1 being not satisfied at all)

Fourth Quarter 2000

First Quarter 2001

10-499

11-1,000

11-500

501-1,000

Defined Benefit Plan - Pension

7.6

7.5

7.3

7.7

Defined Contribution Plans (401(k), etc)

7.0

6.4

6.6

6.2

Life Insurance

6.7

6.9

6.9

6.9

Health Insurance

6.2

6.7

6.3

7.2

Profit Sharing/Bonus

7.3

5.7

6.6

4.9

Stock Options

6.1

4.9

5.7

4.5

Disability Insurance

6.7

6.3

7.0

5.5

3. Average rating of most important benefits, according to employees (scale of 1 to 10; 10 being very important; 1 being not important at all)

Fourth Quarter 2000

First Quarter 2001

10-499

11-1,000

11-500

501-1,000

Health Insurance

8.6

9.2

9.0

9.4

401(k) Plan

7.7

8.5

8.0

9.3

Life Insurance

7.1

8.0

7.6

8.7

Defined Benefit Plan - Pension

7.3

8.2

8.0

8.6

Profit Sharing/Bonus

7.0

7.0

6.8

7.3

Disability Insurance

7.4

7.9

7.6

8.3

Stock Options

5.1

5.3

5.2

5.5

4. Top benefits that employees wish their company would improve:

Fourth Quarter

2000

First Quarter 2001

10-499

11-1,000

11-500

501-1,000

Health Insurance

34%

40%

49%

25%

Defined Contribution Plans (401(k), etc)

15%

25%

18%

36%

Defined Benefit Plan - Pension

8%

4%

3%

5%

Profit Sharing

8%

9%

5%

16%

Life Insurance

4%

2%

3%

-

Disability Insurance

3%

1%

2%

1%

Stock Options

3%

0%

-

-

Flex Time

0%

2%

-

4%

Child Care Subsidies

0%

0%

-

-

On-site Day Care

0%

0%

-

-

Free Parking

0%

1%

-

1%

Tuition Reimbursement

0%

1%

1%

-

None

19%

15%

18%

11%

5. Of the benefits not currently offered, employees noted the top benefits they want their current company to offer:

Fourth Quarter 2000

First Quarter 2001

10-499

11-1,000

11-500

501-1,000

Profit Sharing / Bonus

18%

13%

12%

15%

None

13%

9%

5%

18%

Flex Time

12%

10%

14%

4%

Stock Options

9%

9%

7%

13%

On-site Day Care

8%

2%

3%

1%

Defined Benefit Plan - Pension

8%

24%

23%

25%

Tuition Reimbursement

7%

8%

6%

11%

Health Insurance

6%

5%

2%

9%

Defined Contribution Plans (401(k), etc)

5%

6%

9%

1%

Disability Insurance

5%

2%

3%

1%

Free Parking

0%

4%

6%

1%

Child Care Subsidies

0%

3%

4%

1%

Life Insurance

0%

0%

-

1%

Employee reaction to statements about their financial future, benefits and retirement

1. "My company is concerned about my (and my family's) long-term financial future."

Fourth Quarter 2000

First Quarter 2001

10-499

11-1,000

11-500

501-1,000

Agree Completely

5%

7%

10%

2%

Agree Somewhat

16%

21%

23%

19%

Neither Agree or Disagree

25%

21%

17%

28%

Disagree Somewhat

24%

13%

15%

8%

Disagree Completely

30%

39%

35%

44%

2. "I am very concerned about my (and my family's) long-term financial future."

Fourth Quarter 2000

First Quarter 2001

10-499

11-1,000

11-500

501-1,000

Agree Completely

47%

58%

64%

49%

Agree Somewhat

27%

26%

21%

33%

Neither Agree or Disagree

13%

6%

8%

4%

Disagree Somewhat

7%

8%

6%

11%

Disagree Completely

6%

2%

2%

3%

3. "Having a good benefits plan encourages/would encourage me to work harder and perform better."

Fourth Quarter 2000

First Quarter 2001

10-499

11-1,000

11-500

501-1,000

Agree Completely

32%

32%

25%

44%

Agree Somewhat

35%

27%

26%

28%

Neither Agree or Disagree

21%

26%

28%

24%

Disagree Somewhat

5%

10%

15%

1%

Disagree Completely

8%

5%

6%

4%

4."I have not yet planned for retirement savings/security."

Fourth Quarter 2000

First Quarter 2001

10-499

11-1,000

11-500

501-1,000

Agree completely

16%

8%

13%

1%

Agree somewhat

16%

19%

19%

18%

Neither Agree or Disagree

14%

19%

23%

13%

Disagree somewhat

27%

21%

20%

22%

Disagree completely

27%

33%

25%

46%

5. "Having a good employee benefits plan keeps me/would keep me working for my current company."

Fourth Quarter 2000

First Quarter 2001

10-499

11-1,000

11-500

501-1,000

Agree completely

38%

38%

36%

41%

Agree somewhat

37%

37%

42%

28%

Neither Agree or Disagree

14%

21%

16%

29%

Disagree somewhat

6%

3%

4%

-

Disagree completely

5%

2%

2%

1%

6. "I am extremely happy with my current financial well-being."

Fourth Quarter 2000

First Quarter 2001

10-499

11-1,000

11-500

501-1,000

Agree completely

8%

3%

3%

2%

Agree somewhat

21%

21%

21%

22%

Neither Agree or Disagree

17%

17%

16%

17%

Disagree somewhat

29%

33%

27%

45%

Disagree completely

26%

26%

33%

13%

7. Please rank how important the following three things are to you (percentages are number one rankings):

Fourth Quarter 2000

First Quarter 2001

10-499

11-1,000

11-500

501-1,000

Job Security

43%

42%

45%

36%

Long-term Financial Future

38%

37%

39%

35%

Challenging Work

19%

21%

15%

30%

8. Please rank the following in terms of time spent planning for each (percentages are number one or two rankings):

Fourth Quarter 2000

First Quarter 2001

10-499

11-1,000

11-500

501-1,000

Planning for Vacation

23%

54%

57%

48%

Planning for Retirement

22%

51%

45%

62%

Planning My Wardrobe

N/A

27%

30%

22%

Going to the Movies

N/A

33%

31%

36%

Preparing Income Taxes

26%

30%

33%

25%

9. How often do you think about your long-term financial future?

Fourth Quarter 2000

First Quarter 2001

10-499

11-1,000

11-500

501-1,000

Once a year or less

11%

11%

12%

8%

Two to 11 times a year

29%

25%

25%

23%

One to six times a month

36%

32%

31%

34%

Seven or more times a month

24%

33%

31%

35%

Never

0%

2%

3%

0%

 

The following questions were added to the First Quarter 2001 Index, but were not asked in the Fourth Quarter 2000 Index.

10. Given the recent tumble in the stock market, have you made changes in how you have your retirement savings invested (moving from volatile investments to more stable investments)?

First Quarter 2001

11-1,000

11-500

501-1,000

No, I have not made changes

68%*

58%

85%

Yes, I have made changes

11%

14%

7%

I do not have retirement savings

21%

28%

8%

* Of those who indicated they have retirement savings investments, 86% of respondents said they have not made changes to how their retirement savings is invested (moving from volatile to more stable investments).

11. Do you use the Internet to access information and/or make transactions on your retirement plan?

First Quarter 2001

11-1,000

11-500

501-1,000

Yes, I use the Internet to access information

33%

35%

27%

Yes, I use the Internet to make transactions

9%

7%

14%

None of these

63%

61%

68%

11a. If yes, does having online access give you a feeling of greater control/confidence in meeting your retirement plan goals?

First Quarter 2001

11-1,000

11-500

501-1,000

I feel in greater control using the Internet

29%

19%

70%

I feel a greater confidence using the Internet

26%

22%

41%

Neutral

29%

33%

9%

The Internet is too confusing

13%

14%

11%

The Internet is not beneficial

1%

1%

0

None

23%

0

12. How concerned are you that your benefits package may be scaled back by your employer due to the economic slowdown?

First Quarter 2001

11-1,000

11-500

501-1,000

Very concerned

21%

15%

33%

Concerned

13%

9%

22%

Somewhat concerned

23%

26%

19%

Not at all concerned

42%

51%

27%

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