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The Principal Financial Well-Being IndexSM Executive Summary Fourth Quarter, 2000

Overview:
Harris Interactive conducted The Principal Financial Well-Being Index during November 2000. This is the first in a series of quarterly studies to identify trends in the workplace. Harris Interactive was commissioned by the Principal Financial Group, based in Des Moines, Iowa, to conduct an online survey of employees of small and mid-sized U.S. businesses (10 - 499 employees) about their attitudes and perceptions about their financial well-being and their current employee benefits.

Methodology:
The study was conducted through Harris Interactive's Quick Query omnibus poll, which is fielded to a random subset of a panel of more than 7 million cooperative respondents via the Internet. Five hundred (500) full-time employees of small and mid-sized companies (size range: 10 - 499 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 + 4%.

Major Findings:
Employee's Financial Future and Well-Being

  • Sixty (60%) percent of employees think about their long-term financial future at least once a month or more, while 74% "agree" that they are very concerned about their own and their family's financial well-being.
  • The majority of employees (54%) disagree with the following statement, "my company is concerned about my and my family's long-term financial future." Only 21% agreed that their company was concerned with their and their family's well-being.
  • A majority of employees (55%) said they disagree with the following statement, "I am extremely happy with my financial well-being."
  • Overall, respondents ranked job security first and their long-term financial future second, although both were ranked about equal, with challenging work ranked much lower. The exception to this was the Northeast, which ranked long term financial future first and job security second.
  • Respondents under $35K are more concerned about their family's long term financial future than other groups. They are also less likely to have planned for retirement.
  • Respondents under $35K are less likely to be happy with their current financial well-being and, conversely; those over $75K are more likely to be happy with their current well-being.
Employee Attitudes Toward Benefits
  • Three-quarters (75%) of employees agree with the statement, "having a good employee benefits plan keeps me/would keep me working for my current company."
  • The top new benefits that employees wish their employers would offer in their benefit package include profit sharing/bonus (18%), None (13%), Flextime (12%), and stock options (9%).
  • Employees were the most satisfied with their pension and profit sharing/bonus plans among the current benefits offered by their employer.
  • The largest gap between people's satisfaction with individual benefit programs and the importance of those programs was related to health insurance. In fact, employees (ranked at 10 on a 10-point scale) ranked health insurance the most important of all benefits, and 41% of employees who currently have health insurance benefits said they wish their company would improve upon them. In all geographic regions, respondents rated the importance of health care benefits much higher than their current satisfaction with this benefit. This is also true to a lesser extent with respect to 401(k) programs offered by employers.
  • Not surprisingly, health insurance was the program mentioned most often as the benefit they would most like to see improved upon. In the northeast, 401(k) benefits also received a high percentage of mentions for having the benefit improved.
  • Health Insurance was the most common benefit offered to employees (77%), followed by free parking (70%) and a 401(k) plan (63%).
  • Stock options ranked as the lowest in terms of importance to employees.
  • Respondents under $35K are generally less satisfied with their benefit programs than other income groups.
  • Respondents over $75K are less likely to work harder because of good benefit programs than other income groups

Attitudes Toward Retirement

  • Thirty-two (32%) percent of employees "agree" that they have not yet planned for retirement savings/planning.
  • The average age that employees gave when they would retire was 63.5. Nine (9%) percent of employees said they would retire at 55 years of age or sooner.
  • Almost half of employees surveyed expect to receive less than 60% of the social security benefits that they are entitled to when they retire.

Difference by Geography

  • Respondents in the West and South were more likely to express concern over their family's long term financial future. Respondents in the Northeast and West were more likely to indicate that good benefit programs would keep them working for their current employer.
  • Employees in the South are less satisfied with health insurance than other regions and the Northeast is less satisfied with the profit sharing/bonus programs.
  • People in the Midwest and West tend to have a greater number of benefit programs offered to them by employers. The major exception to this is that Northeast employees are more likely to have a pension plan.
  • Generally speaking, respondents in the Northeast tended to place greater importance on the various benefit programs.
  • For new programs to add, Flextime was mentioned frequently in the Northeast and South. Profit Sharing was mentioned a lot in the Midwest and South. Onsite Day Care was mentioned most in the West.
  • The largest percentage of people expect to retire between 65-69 and this is similar across all regions.
  • Respondents over $50K tend to rank the importance of challenging work higher than other income groups.

Detail of Major Findings

Employee Attitudes toward Benefits

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

Health Insurance

77%

Free Parking

70%

401(k) -- defined employee benefit plan

63%

Life Insurance

58%

Disability Insurance

48%

Pension

33%

Flextime

25%

Tuition Reimbursement

25%

Profit Sharing/Bonus

19%

Stock Options

14%

Child Care Subsidies

4%

On-site Day Care

2%


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

Pension -- define employee benefit plan

7.6

401(k) -- defined employee contribution plan

7.0

Life Insurance

6.7

Health Insurance

6.2

Profit Sharing/Bonus

7.3

Stock Options

6.1

Disability Insurance

6.7

3. Most Important Benefits, According to Employees (scale of 1 to 10; 10 being very important; 1 being not important at all)

Health Insurance

8.6

401(k) Plan

7.7

Life Insurance

7.1

Pension

7.3

Profit Sharing/Bonus

7.0

Disability Insurance

7.4

Stock Options

5.1

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

Health Insurance

34%

401(k) Plan

15%

Pension Plan

8%

Profit Sharing

8%

Life Insurance

4%

Disability Insurance

3%

Stock Options

3%

None

19%

5. Top new benefits that employees want their current company to offer:

Profit Sharing / Bonus

18%

None

13%

Flextime

12%

Stock Options

9%

On-site Day Care

8%

Pension Plan

8%

Tuition Reimbursement

7%

Health Insurance

6%

401(k) Plan

5%

Disability Insurance

5%

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

Agree completely

32%

Agree somewhat

35%

Neither Agree or Disagree

21%

Disagree somewhat

5%

Disagree completely

8%

Employee reaction to statements about financial future, benefits and retirement

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

Agree completely

5%

Agree somewhat

16%

Neither Agree or Disagree

25%

Disagree somewhat

24%

Disagree completely

30%

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

Agree completely

47%

Agree somewhat

27%

Neither Agree or Disagree

13%

Disagree somewhat

7%

Disagree completely

6%

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

Once a year or less

11%

Two to 11 times a year

29%

One to six times a month

36%

Seven or more times a month

24%

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

Agree completely

8%

Agree somewhat

21%

Neither Agree or Disagree

17%

Disagree somewhat

29%

Disagree completely

26%

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

Job Security

43%

Long-term Financial Future

38%

Challenging Work

19%

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

Agree completely

16%

Agree somewhat

16%

Neither Agree or Disagree

14%

Disagree somewhat

27%

Disagree completely

27%

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

Agree completely

38%

Agree somewhat

37%

Neither Agree or Disagree

14%

Disagree somewhat

6%

Disagree completely

5%

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

Paying My Bills

87%

Buying Clothes

33%

Preparing Income Taxes

26%

Vacation

23%

Planning for Retirement

22%

Buying a Car

11%

9. Age that employees plan to retire:

Under 30

2%

40-49

4%

50-54

3%

55-59

8%

60-64

23%

65-69

40%

70 and over

20%

Average Age

63.5 years

10. Percentage of Social Security benefits they are entitled to that employees expect to receive after retirement:

1-10%

5%

11-20%

8%

21-40%

8%

41-60%

13%

61-80%

11%

81-100%

41%

None

15%

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