Employers are getting ready for benefits to cost more for an older workforce. And while some are willing to absorb the additional expense, others plan to let workers foot the bill.
That’s according to a plan sponsor survey from the LIMRA Secure Retirement Institute, which said in a blog post that although 73 percent of employers are steeling themselves for higher costs resulting from an older workforce, that doesn’t mean they’re also preparing to pay for it all.
In fact, while half have said they’d absorb the cost, another 41 percent intend to pass it along to their employees. A third said that they’d consider cutting benefits, salary growth and their own contribution to employee retirement plans to manage benefit expenses.
Companies say that it’s beneficial to have older workers on the job, and that when they leave, the company loses experience, leadership, and institutional knowledge.
That’s fortunate for workers who aren’t ready to leave the workplace, since many need to stay to boost retirement savings. Only 5 percent of workers in another Secure Retirement Institute study said they felt “extremely well prepared” for retirement; 20 percent of workers within 10 years of retirement don’t plan to leave the workplace till at least age 70, while another 30 percent intend to stay till age 66.
But if they’re not getting rid of their older workers, employers are getting ready to fire their plan advisors.
In Fidelity’s sixth annual Plan Sponsor Attitudes survey, 86 percent of sponsors said that more participants are putting off retiring because they don’t have enough money to do so.
That’s hitting plan sponsors in two ways: aging their workforce in place—which is not necessarily a bad thing—and increasing costs for benefits, salaries and other expenses that were neither forecasted nor planned for.
Employers may be thinking that if plan advisors had done a better job on plan performance, employees would be better prepared financially. So, by extension, sponsors would be paying lower costs, not higher ones.
If plan advisors didn’t see this coming, they’re probably already on their way out the door—whether older workers are or not.
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