‘We Want Benefits We Can Enjoy Now’ Say Employees Worldwide – Mercer Survey

• Participants prefer benefits such as more paid time off over those with potentially longer-term value
• Employers face increased pressure to educate employees on balancing short and long term benefit choices

NEW YORK--(BUSINESS WIRE)--Given the choice, employees worldwide tend to select benefits that offer immediate gratification rather than those that potentially deliver value over the long term, according to a Mercer survey of 10,400 workers in ten key markets around the world.

In fact, an extra week of paid time off was among the top-three employee choices in seven of the ten markets surveyed (see Figure 1). Underscoring this trend of “immediacy” over longer-term benefits, employees selected a salary increase over all benefit offerings listed in the survey (except in Canada where paid time off edged out a salary increase.) These preferences underscore the challenge faced by employers worldwide in empowering employees to make more of their own benefit choices while encouraging them to strike the right balance between the shorter and longer-term value of the benefits they choose.

This insight is just one of many revealed by the new Mercer Making Smart Benefit Choices survey of workers in ten key markets (US, UK, Ireland, Canada, Brazil, Spain, France, Italy, China and Hong Kong) during July and August 2012. The survey sought to measure the perceived value employees place on various employer- and employee-paid benefits.

“Employers worldwide are asking their employees to make more and more decisions for themselves when it comes to their benefit programs,” said Dave Rahill, President of Mercer’s Health & Benefits business. “Employees valuing more time off and increased pay in the current stress-filled economic environment may be understandable, but there are other benefits that have the potential to create more income protection through health benefits and income replacement through retirement and savings vehicles. This challenge puts even more pressure on employers to deeply understand and communicate the value of various benefits to their employees so they can make smart choices.”

The Making Smart Benefit Choices survey also asked employees to rank the kind of benefits they are willing to pay for themselves, often referred to as “voluntary” or “flexible” benefits. These benefits are usually paid for by the employee out of pocket or through an employer’s flexible benefits plan. These company-run programs can offer employees discounted prices compared to the open market.

Responses reflected a broad split between markets in which a wider range of health benefits are provided publicly and/or by employers and those where health benefits are not as accessible (see Figure 2). In the former, benefits that provide additional insurance are the most popular (e.g., US, UK, Ireland, Canada), while in the latter (e.g., Brazil, China) offerings like additional retirement/savings rank highly. In some markets where the state is the primary provider of health care (e.g., Ireland, Spain, Italy) supplemental private medical insurance is popular as a voluntary or flexible benefit.

“More and more employers are under pressure to offer a broader range of benefits to their employees,” said Amy Laverock, Mercer’s Global Health & Benefits Strategic Solutions Leader. “Reasons range from gaps in the public health care systems to competing firms making creative and innovative benefits available. However, it is increasingly difficult for employers to simply add core benefits with the costs of these benefits outpacing inflation. Voluntary or flexible benefit offerings can often bridge this gap while empowering employees to chose benefits that match their particular needs and lifestyles.”

With concern about successful retirement a global issue, the survey also included questions on perceived retirement readiness among employees. In most markets, the percentage of respondents who feel very or fairly concerned about retirement ranged between two-thirds and three-quarters. This concern is well founded; in markets outside of Asia approximately 75% are saving less than 10% of their total compensation towards retirement (see Figure 3).

"Employers need to enhance the perceived value of the benefits they offer to employees to ensure the investments they make in these programs generate more strategic, long-term advantages,” said Fergal McGuinness, Mercer’s Global Defined Contribution Leader. “In this respect, the survey results illustrating the high levels of anxiety that exist around retirement readiness are particularly important. Employers taking simple steps to help employees understand and plan for their retirement needs can expect a return in the form of enhanced engagement, loyalty and motivation."

Preferences among US employees

In the US market, Making Smart Benefit Choices revealed several important insights, particularly in the area of voluntary benefits. The top three benefits US employees were willing to pay for are disability, life and auto insurance. Among the list of other possible voluntary benefits, accident and hospital indemnity insurance are also relatively popular, while legal assistance and identity theft insurance rank near the bottom (see Figure 4).

Looking at these results more closely, however, it is clear that one size does not fit all and different benefits appeal to different employee segments. Disability insurance appeals more to those aged 55-64 and transportation industry employees; retail discounts to young singles living independently and households with children; and hospital indemnity insurance to those aged 65 and older and senior managers. Auto insurance ranks highly among those that work more than 50 hours a week and those in the high-tech industry; homeowner insurance among those with household incomes between $50,000 and $60,000; and pet insurance among those in professional services.

“Voluntary benefits are perhaps the best example across all types of benefits that perceived value differs across industries, ages, lifestyles and role,” said Sharon Cunninghis, US Leader of Mercer’s Health & Benefits business. “Employers will want to understand these perceived values as they redesign, or add to, their existing plans in order to provide benefits programs that are competitive in the marketplace, appeal to employees and enable cost control.”

About Mercer’s Making Smart Benefit Choices survey

Mercer’s Making Smart Benefit Choices survey was conducted in order to help employers measure the perceived value employees place on various benefits. The survey asked respondents which core benefits, from market-specific lists, are offered by their employers and whether they participate in these benefits. Respondents were then asked about their preferences in a trade-off (conjoint) analysis that allowed Mercer to compare preferences for 12 core benefits against an incremental salary increase. The list of core benefits varied by market and all benefits included in the study were of roughly equivalent value. In addition, respondents were asked to select from a separate list of voluntary benefits the top three products they would be willing to pay for themselves through a company program and to gauge their retirement preparedness. The survey was conducted in July and August 2012 among 10,400 workers across ten markets: US, UK, Ireland, Canada, Brazil, Spain, France, Italy, China and Hong Kong. To download the global and market-specific executive summaries, please visit www.mercer.com/benefit-choice-research.

Making Smart Benefit Choices is a key element of Mercer’s global Inside Employers’ Minds: Confronting Critical Workforce Challenges campaign which aims to help organizations understand and address their most pressing issues and concerns, including benefit choices.

About Mercer

Mercer is a global consulting leader in talent, health, retirement and investments. Mercer helps clients around the world advance the health, wealth and performance of their most vital asset – their people. Mercer’s 20,000 employees are based in more than 40 countries. Mercer is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global team of professional services companies offering clients advice and solutions in the areas of risk, strategy and human capital. With 52,000 employees worldwide and annual revenue exceeding $10 billion, Marsh & McLennan Companies is also the parent company of Marsh, a global leader in insurance broking and risk management; Guy Carpenter, a global leader in providing risk and reinsurance intermediary services; and Oliver Wyman, a global leader in management consulting. For more information, visit www.mercer.com. Follow Mercer on Twitter @MercerInsights.

Figure 1 - Top Three Benefits in Terms of Employee Preference
	United States	United Kingdom	Ireland	Canada	Brazil	Spain	France	Italy	China	Hong Kong
#1	PTO	PTO	PTO	PTO	Food/gas subsidy	Private health coverage	Dental coverage	DC contribution	Commutation assistance	PTO
#2	DC contribution	Disability insurance	One-for-all voucher	DC contribution	DC contribution	Dental coverage	Vision coverage	Dental coverage	Housing allowance	Flex savings contribution
#3	Decreased health insurance premium	Private health coverage	Company-paid mobile phone	Improved health/dental coverage	PTO	PTO	Disability coverage	Life/accident coverage	Savings plan	Pre-tax transportation deduction
Source: Mercer's Making Smart Benefit Choices survey, 2012
PTO = Paid Time Off

Figure 2 - Top Three Voluntary/Flexible Benefits Employees are Willing to Pay for
	United States	United Kingdom	Ireland	Canada	Brazil	Spain	France	Italy	China	Hong Kong
#1	Disability	Life	Disability	Auto	Long-term/retiree medical	Private medical	Supplemental medical	Dependent supplemental medical	Supplemental retirement	Supplemental savings
#2	Life	Retirement savings	Life	Homeowner	Savings options	Pension plan	Dental	Life	Additional housing allowance	Critical illness
#3	Auto	Critical illness	Private medical	Life	Life/disability	Retirement savings	Vision	Supplemental medical	Supplemental savings	Disability / accident
Source: Mercer's Making Smart Benefit Choices survey, 2012

Figure 3 - Retirement Preparedness by Market
	United States	United Kingdom	Ireland	Canada	Brazil	Spain	France	Italy	China	Hong Kong
% very/fairly concerned about retirement	74%	66%	77%	68%	74%	61%	76%	78%	81%	71%
% saving <10% of compensation	72%	72%	77%	70%	63%	77%	78%	68%	45%	54%
Source: Mercer's Making Smart Benefit Choices survey, 2012

Figure 4 – Voluntary Benefits: Percentage of US Employees Ranking Benefits in the Top Three That They Would Be Willing to Pay For
Disability insurance	38%
Life insurance	34%
Auto insurance	34%
Accident insurance	29%
Hospital indemnity insurance	25%
Retail discount programs	23%
Critical illness insurance	22%
Homeowner insurance	22%
Long-term care	19%
Appliance purchasing programs	17%
Pet insurance	16%
Legal assistance	11%
Identity theft insurance	11%

Source: Mercer’s Making Smart Benefit Choices survey, 2012