Posts Tagged "employer"
December 7, 2021
Small Business Backing of Paid Leave Grows
The pandemic exposed inequities in the U.S. healthcare system. It also revealed a related shortcoming in our workplaces: the lack of mandated paid family and medical leave for most Americans – and especially lower-paid workers.
The United States is the only developed country that does not have a national policy of paid time off for an extended period for illness or maternity leave. In that way, we are keeping company with places like Micronesia and Tonga.
Many major employers do offer sick time and paid or unpaid maternity leave. Even so, 60 percent of the highest-paid workers, who tend to work in larger companies, don’t have access to paid leave for themselves or a family member for extended periods for a severe illness, according to the National Partnership for Women and Families. The situation is much tougher for lower-paid workers, who are concentrated in small business: 93 percent lack access to paid leave.
Last month, the House approved a reconciliation bill that would mandate four weeks of paid leave for all workers in the event that they or family members become ill. It’s uncertain whether this provision of the reconciliation bill will clear the Senate.
The National Federation of Independent Business (NFIB) has opposed paid leave in the past, arguing that workers who take extended time off strain under-staffed small employers. Although the federal government would pay a supplement to employers for the leave under the House bill, NFIB said the required paperwork creates administrative headaches.
But this position isn’t supported by small business owners, according to a new study. Even prior to the pandemic, they were in favor of a paid leave policy for employees to take care of family members – and COVID has only strengthened their resolve.
In the fall of 2019, 62 percent of small businesses in New Jersey and New York were very or somewhat supportive of paid family leave, the researchers found. By the fall of 2020 – after months of wrestling with how to handle employees whose family members had contracted COVID – small employers’ support had jumped to 71 percent. …Learn More
September 9, 2021
401k Plans Evolve to Boost Workers’ Savings
Many employees in the private sector, when left to their own devices, either save very little in the company retirement savings plan or don’t even sign up for it.
But a growing number of companies have revamped their 401(k)-style plans over the past two decades to strengthen the incentives for employees to save. While progress has been gradual and uneven, the companies are moving in the right direction.
In a new study, researchers have compiled a unique nationally representative data set that tracks the changes employers have made to their 401(k)s and 403(b)s. The findings describe three important areas in which they are making progress:
- About 41 percent of the largest 4,200 U.S. employers in this study automatically enrolled workers in a savings plan in 2017 – up sharply from 2 percent in 2003. Workers can still opt out but the vast majority remain in the plans.
- Similar improvements were also evident in the study’s broader sample of employers of all sizes. In 2017, about a third of all companies had auto-enrollment, compared to virtually none in 2003.
- Among companies with auto-enrollment, about 44 percent of the large employers and half of the overall sample are automatically increasing their workers’ contributions.
- Contributions to the plans are generally rising too.
The researchers credited some of the improvements to the Pension Protection Act. The 2006 law explicitly allowed companies to automatically enroll employees in savings plans and also established a minimum standard for the level of employer contributions made by companies that adopt auto-enrollment. …Learn More
June 8, 2021
$4 Billion in Pension Payments Returned
It’s the employer’s responsibility to find former employees and keep them apprised of any retirement benefits they left behind.
But that hasn’t always worked out. Some employers don’t have former workers’ current contact information, and others don’t bother to track them down. Worst-case scenarios are often fallout from a merger: the company being acquired has kept shoddy pension plan records and the acquirer doesn’t update them. Some companies have even deleted a participant’s name from the records.
Tyler Compton, an attorney with the Pension Action Center, which connects workers with lost pensions and 401(k) savings plans, said people frequently contact a former employer because they think they might have a plan. But if the worker is told he’s not in the records, he might drop the matter, she said.
The U.S. Department of Labor decided several years ago that employers’ efforts weren’t good enough. The department’s Employee Benefits Security Administration (EBSA) began investigating the problem and pushing companies to improve their methods for finding workers who had quit or been laid off but were owed pension benefits or had savings sitting in an old 401(k).
EBSA has gotten results. Since 2017, more than $4 billion in past due defined benefit pension payments have been returned to millions of plan participants.
By making clear what is expected of employers, regulators “put a lot of pressure, in a good sense, on plan administrators to really up their games,” Jeffrey Holdvogt, a legal partner with McDermott Will & Emery, said in a recent webinar hosted by the Pension Action Center at the University of Massachusetts, Boston. …Learn More
March 23, 2021
UK Pension Reforms Show Some Promise
Unlike the United States, the United Kingdom has implemented bold reforms to its retirement system over the past decade.
Two of the biggest changes were gradual increases in the minimum age for collecting a pension under the national social security program and requiring private employers to automatically enroll their workers in an employee savings plan.
The goals of the reforms were to keep government spending in check and encourage individuals – who are living longer – to work longer, while helping them build up more private savings through employer-based plans. On balance, the notion is that workers will end up better prepared financially when they retire. Time will tell how successful these reforms will ultimately be.
But, so far, the results have been somewhat promising, concludes an Institute of Fiscal Studies report on workers’ changing expectations and attitudes about their retirement prospects.
In a major reform to private-sector plans, lawmakers started expanding coverage in 2012 by requiring that employers – the largest ones were first – automatically enroll workers earning more than £10,000 (about $14,000) in a retirement savings plan. The total contributions to the plans must now be at least 8 percent of each worker’s earnings, with employers providing at least 3 percent.
This reform seems to have enhanced workers’ sense of financial security. In 2017, 78 percent said in a survey that they expect to get some retirement income from an employer savings plan – up from 63 percent in 2013. And while workers are permitted to opt out of the plans, they are doing so at consistently low rates.
On the retirement front, the minimum age to collect benefits under the U.K. social security system, the National Insurance Scheme, has risen dramatically for women. A decade ago, they could collect a pension at 60, but that had increased to 66 by last year. They are now in line with men, whose minimum age was 65 for many years and also rose to 66 last year. In the future, the increases are expected to continue: a 50-year-old worker would not be able to collect his pension until he is 68. …Learn More
October 29, 2020
Disability Accommodations Help Workers
This big number may surprise you: one out of every four adults feels they need some type of accommodation by an employer for a medical condition or disability.
This finding comes from a study in the Journal of Policy Analysis and Management that established a very inclusive standard for determining the need for employer accommodations. The researchers concluded, after following individuals 18 and older in their study for four years, that their employment rate was higher when they received support.
The Americans with Disabilities Act of 1990 requires employers to provide workers and job applicants with a “reasonable accommodation.” But disabling conditions aren’t always visible, and many people never ask employers for assistance. In addition, some employers – particularly small firms – may see accommodations as too costly.
In their 2014 supplement to a periodic RAND survey, the researchers found that 23 percent of workers and unemployed individuals said “yes” to a broad question designed to get a more accurate estimate of need than standard surveys: Does, or would, a special accommodation for your health “make it easier for you to work?”
This group was made up of workers who were already receiving an accommodation, as well as employed and unemployed individuals who felt they could use such support.
Workplace accommodations range from small things like buying a standing desk for an office worker with acute sciatica to reassigning a warehouse worker to a less physical task after he develops back problems. About half of the people who said an accommodation would help them received one – and the benefits were clear.
Between 2015 and 2018, their employment rate held steady at around 85 percent. But the rate for the people who weren’t being accommodated fell sharply, from 92 percent to 72 percent, according to the study funded by the Social Security Administration. …Learn More
October 27, 2020
Retirement System Urgently Needs Fixing
The state of our retirement preparedness is captured in this fact: about half of U.S. private sector workers at any given time are not enrolled in an employer retirement plan.
To be clear, they are not currently enrolled. Some of them have participated in a plan in the past or will in the future. But this inconsistency is the problem, largely because so many employers still don’t offer 401(k) savings plans to their employees.
The financial toll of not saving consistently is modest retirement account balances. Yet saving has become increasingly urgent as traditional pensions have virtually disappeared from the private sector and Social Security is replacing less of workers’ incomes over time.
In 2019 – after several years of economic growth and a surging stock market – the typical working household, ages 55 to 64, that saves in a 401(k) had only $144,000 in its 401(k)s and IRAs combined, the Center for Retirement Research found in an analysis of the Federal Reserve’s 2019 Survey of Consumer Finances.
That’s just $9,000 more than they had in the 2016 survey, and $144,000 won’t go very far.
A $144,000 account would yield $570 per month for retirement if a couple purchases an annuity that pays a guaranteed income for the rest of their lives. For most retirees, the annuity payments – totaling just under $7,000 per year – would be their only source of income outside of Social Security.
There are also enormous differences between high- and low-income households’ savings, which reflect the nation’s economic disparities and uneven employer coverage. The highest-income older households in the study had $805,500 in their combined 401(k) and IRA accounts, compared with just $32,200 for low-income households. …Learn More
May 23, 2019
Student Loan Payments Linked to 401ks
Student loans or the 401(k)?
Young adults have a tough time finding the money for both. Unless they work for Abbott Laboratories.
Employees who put at least 2 percent of their income toward student loan payments will qualify for Abbott’s
5 percent contribution to their 401(k) account – without the worker having to put his own money into the 401(k).
From the company’s point of view, it’s an innovative recruitment tool – and it worked for Harvir Humpal, a 2018 biomedical engineering graduate of the California Polytechnic State University in San Luis Obispo. He joined Abbott’s northern California office in February.
Humpal said his student loans weighed on him after graduation. “It’s very empowering that Abbott is willing to tackle an issue that’s near to my heart,” said the 24-year-old, who works on medical devices used in heart transplants.
He estimates he will pay off his $60,000 student loans about four years early and save $7,000 in interest – without completely sacrificing his retirement savings.
As the cost of college continues to rise and U.S. student loan balances hit $1.5 trillion, an increase in the number of private and even government employers offering student loan assistance is a response to the growing financial burden. An Abbott survey found that 87 percent of college students and 2019 graduates want to find an employer offering student loan relief.
The magnitude of the problem “forces us to focus on our employees’ greatest needs and how we, as an employer, can help them,” said Mary Moreland, an Abbott vice president of compensation and benefits. …Learn More