By Rob Starr, Content Manager, Big4.com
Companies responding to the 2012-2013 Verisight and McGladrey Compensation, Retirement and Benefits Trends Survey indicate that they are looking closely at the competitive landscape when formulating their compensation philosophies. Base salary increases for salaried workers continued to edge upward in 2012, with an average increase of 2.6 percent including salary freezes. The anticipated 2013 salary increase of 2.7 percent is still a historically modest increase that reflects persistent unease regarding the economy, buffered by the need to retain key employees critical to future success. Increases were highest among service, finance, banking and insurance companies and lowest for the economically harder-hit construction and real estate sectors.
“As the dust from the economic crisis slowly settles, business leaders are challenged with rising benefits costs, evolving healthcare reform, calls for increased transparency and regulatory changes,” said Martha Sadler, managing director of Verisight, Inc. “Despite this strained economic backdrop, decision makers are staying the course when it comes to total rewards for employees. In general, leaders are being asked to do more with less and this directive is defining current practices in compensation, retirement and health and welfare benefits programs.”
When it comes to evaluating retirement plans, costs of investments (59 percent), costs of services (57 percent) and quality of service (53 percent) continue to be the major factors influencing decision making. As employers strive to attain appropriate investment diversification without overwhelming their participants, providing choices to employees remains paramount. Half (51 percent) of the employers surveyed offer 11-20 plan investment options. Mutual funds are still the most common investment type and are offered by 92 percent of retirement plans.
Eighty percent of employers in the survey experienced an increase in healthcare costs in 2012. One-third say that their health plan costs rose by at least 8 percent from 2011 to 2012. To address this increase, employers are passing more of the cost to employees by raising their share of the premiums, deductibles and co-payments. For companies overall, the average monthly premium for family coverage edged up to $1,252 for 2012, with employees contributing a historically high 36 percent of the cost. The average monthly premium for employee-only coverage was $539 with employees contributing 22 percent of the cost.
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