Buck Bond Group

Employees care almost equally about their retirement and medical benefits as economic concerns make it harder to save, Buck survey shows

NEW YORK – November 2, 2023 – Employees expect their defined contribution (DC) plan to be a key vehicle for funding their retirement and they are worried their retirement savings will not be enough to cover their expenses, according to new research from Buck, an integrated HR, pensions, and benefits consulting, technology, and administration services firm, and a Gallagher company.

To gain insight into employees’ satisfaction with their retirement benefits and their ability to save for retirement, Buck commissioned an independent research firm to survey benefits-eligible employees and HR and benefits professionals who administer retirement plans, allowing for a comparison of similarities and differences between employee and employer responses.

The findings are published in Buck’s survey report, Saving for retirement: Employee and employer attitudes towards retirement benefits. Employees were asked to identify the top three benefits they look for when considering a new job, and the data shows they care almost equally about their retirement benefits (65%) and medical coverage (67%), followed by dental insurance (36%) and flexible schedules (33%). Employers recognize this, but think medical coverage is a more significant consideration (77%), with retirement benefits second (70%) followed by flexible schedules (36%) and dental insurance (32%).

More significantly, 91% of HR professionals believe their organizations offer competitive retirement packages, though 61% of employees believe they could find a better package with a different employer.

“With rising inflation, it’s not surprising that employees are concerned about their ability to save for retirement and this, in turn, is reflected in the perceived value of employer-sponsored retirement plans,” said Tonya Manning, U.S. Wealth Practice Leader and Chief Wealth Actuary at Buck, a Gallagher company. “DC plans have evolved to become the primary retirement savings vehicle for Americans, and for plan sponsors, the challenge is how to help participants reach their savings goals.”

Key survey findings

  • While many employees (79%) are satisfied with their retirement benefits, they don’t necessarily believe their savings will prove adequate and 76% have increased concerns about their capacity to save for retirement given the unstable economy. More than a third (35%) of employees cited the rising cost of living expenses as the top impediment to saving, followed by personal debt (20%) and family obligations (11%).
  • As a sign that employees are more focused on their immediate cash needs, more than half (53%) of employees preferred a $500 pay increase over a $500 increase in contributions made to a retirement plan.
  • An indication that employees are looking for a way to save for more immediate cash on-hand needs, 79% of employees would like their employer to offer supplemental savings accounts, such as emergency savings, in addition to retirement benefits.
  • Despite new legislation, retirement benefits have remained largely unchanged; almost half (46%) of employers say their retirement package has remained the same in the past two years, and 39% of employees agree. However, 57% of employers offer, or plan to offer, matching retirement contributions for student loan payments, a provision included in the recent SECURE 2.0 legislation. This would be a popular move as 57% of employees would like to see this enhancement.
  • Increasing the company match is viewed as the best way to improve retirement plans by both employees (52%) and employers (49%). Employees and employers were also in lockstep regarding other top focus areas to improve retirement benefits, which included improving or offering a pension plan and offering more investment options.
  • Nearly half of all employees (45%) believe they need more than $1M to retire, and 10% believe they need more than $2M. More than two thirds (70%) believe that defined contribution plans are key to funding their retirement.
  • Some employers (28%) think that increasing education and communications could help to improve their retirement benefits. For employees, the most confusing parts of their retirement plan are withdrawal options, followed by investment options and plan fees and expenses. Additionally, a troublesome 39% of employees are unsure if they contribute the required percentage of their annual compensation to receive the full company match, indicating that more employer communications may be needed.

“The good news is that employees are aware that their contribution to their retirement plan is key to a successful outcome,” says Manning. “However, with today’s financial stressors, it’s critical that plan sponsors regularly assess what policies or strategies are in place to increase retirement plan participation, drive savings rates higher, and improve participant investment outcomes. This will help boost employee confidence in their retirement plan’s ability to help them reach their savings goals — and enable employers to deliver on their promise to help their workforce retire with dignity.”

To learn more about the Saving for retirement survey findings, please visit buck.com.

Buck will be hosting a webinar “Planning for your employees’ retirement: How to design a DC plan that adds up,” on Wednesday, November 15, 2023, from 1 – 2 p.m. ET to review the findings and implications for plan sponsors. Register for the webinar here.

About the survey
Buck commissioned an independent research firm to survey 344 employees with retirement benefits and 200 HR and retirement professionals about plans, savings, investments, and retirement education in 2023. The research was conducted in late July through August 2023. The margin of error for this study is +/-5% at the 95% confidence level for each audience.

About Buck
Buck, a Gallagher company, is an integrated HR, pensions, and employee benefits consulting, technology, and administration services firm. Founded more than 100 years ago as an actuarial consultancy, we’ve evolved to serve organizations and trustees across the health, wealth, and career spectrum.

With the ultimate goal of securing the futures of our clients’ employees and members, we develop tech-enabled programs that engage individuals and drive organizational performance. Our award-winning engagement solutions and people-first approach empower the world’s most forward-thinking organizations to protect the physical and financial wellbeing of their employees and members and improve how their people work and live. For more information, visit www.buck.com.

About Arthur J. Gallagher & Co.
Arthur J. Gallagher & Co. (NYSE: AJG), a global insurance brokerage, risk management and consulting services firm, is headquartered in Rolling Meadows, Illinois. Gallagher provides these services in approximately 130 countries around the world through its owned operations and a network of correspondent brokers and consultants. For more information, visit https://www.ajg.com/us/.

Media contact:
Lumina Communications for Buck
Michael Gallo