Category Archives: Benefits

2016 State of Missouri Compensation & Benefits Study

Source: CBIZ Human Capital Services, July 29, 2016

CBIZ Human Capital Services (“CBIZ”) was engaged by the State of Missouri (“State”) to conduct a comprehensive compensation study for its employees, including a review of current compensation practices, an update of the compensation plan, and a benefits analysis.

In order to assist the State in implementing a compensation system that considers both market and internal factors, CBIZ matched the State’s positions to positions in the market, developed a new salary structure, and calculated the cost of implementing the recommendations. In addition to evaluating base salaries at the State, CBIZ assessed total cash compensation and competitive benefits levels.

As a part of this process, the employee data reflects the 2% general structure adjustment that took effect on July 1, 2016.

This report details CBIZ’s findings and recommendations, the summary of which indicates that the State’s current compensation practices are, in the aggregate, below market-competitive levels as evidenced by the following:

• Base salary is, on average, 10.4% below the recommended salary range midpoints, which approximates the published survey data market median. (See Exhibit 5A for additional detail.)
• Total cash compensation (the sum of base salary and incentives, the latter of which the State does not provide) is, on average, 12.6% below market. (See Exhibit 8 for additional detail.)
• The benefits offered by the State are 19.7% above market and improve the overall market position of the State. However, State employees remain 4.6% below market when totaling base salary, incentives, and benefits. (See Exhibit 8 for additional detail.)
• The cost to adjust compensation to the threshold of market competitiveness, identified as the minimum of the proposed pay ranges, is $13,690,388 as the result of 5,050 State employees being paid below the proposed pay range minimums. (See Exhibit 5A for additional detail.)
• Missouri ranks last among the 50 states in average employee pay. (See Exhibit 10 for additional detail.)

For reasons detailed later in this report, this analysis has limited utility. CBIZ focused on the broader market for most of the analysis.

The remainder of this report will explain the methodology and expand on this summary in order to clearly document the comprehensive approach taken to analyze the State’s current compensation practices and develop its new compensation plan.
Exhibits 1A-10
Exhibit 11

Forensics and the Future of a Connecticut Pension Plan

Source: Jean-Pierre Aubry and Alicia H. Munnell, Center for Retirement Research at Boston College, SLP#46, December 2015

The brief’s key findings are: 
– Connecticut’s State Employees Retirement System faces a large unfunded liability, despite recent efforts by the State to fund.
– A significant source of the liability is the “legacy debt” built up before the State began pre-funding its pensions in the 1970s.
– More recently, inadequate contributions, low investment returns (since 2000), and early retirement incentives have added to the problem.
– A promising approach for addressing the funding problem is to provide more breathing room in exchange for a real and sustained commitment to funding by:
– separately funding the legacy debt over multiple generations; while
– funding ongoing benefits using a stricter method for calculating required contributions, and reducing the long-term assumed return on plan assets.

When Employers Pay Student Loans, Those Who Most Need Help Are Left Out

Source: Gillian B. White, The Atlantic, July 19, 2016

Companies are providing debt assistance to their employees—a nice, and rarefied, perk. …. The benefits tend to come in one of three forms: tuition assistance (which pays for school directly for employees who are currently enrolled), student-loan payment assistance (which helps graduates pay off their existing loans), and consolidation and refinancing opportunities. That last tool is a newer and less common perk. Refinancing can make a huge difference for those with significant debt; by lowering interest rates it can drastically reduce the total amount of money paid. …..

Paid Sick Days Benefit Employers, Workers, and the Economy

Source: Jessica Milli, Jenny Xia, Jisun Min, Institute for Women’s Policy Research, IWPR #B361, July 2016

From the abstract:
Millions of workers have gained access to paid sick days in recent years through new laws in five states, 23 cities, and one county across the country. Yet millions more still would not be paid if they need to stay at home when they are sick or need to care for a family member who is ill. As of 2014, 51 million workers lacked access to paid sick days. Research has documented many benefits of paid sick days policies for workers, businesses, and communities as a whole. These benefits would multiply substantially if more workers gained access to paid sick days. This briefing paper summarizes research on the benefits of paid sick days and the effects of paid sick days policies in places that have them.

An Overview of the Pension/OPEB Landscape

Source: Alicia H. Munnell and Jean-Pierre Aubry, Center for Retirement Research at Boston College, July 1, 2016

….This paper provides a comprehensive accounting of pension and OPEB liabilities for state and local governments and the fiscal burden that they pose. The analysis includes plans serving more than 800 entities: 50 states, 178 counties, 173 major cities, and 415 school districts related to the sample of cities and counties. The analysis apportions the liabilities of state-administered cost-sharing plans to participating local governments for a more accurate picture of which governmental entity is actually responsible for funding pension and OPEB liabilities. The cost analysis calculates, separately, pension and OPEB costs as a percentage of own-source revenue for states, cities, and counties. It then combines pension and OPEB costs to obtain the overall burden of these programs. Finally, it adds debt service costs to provide a comprehensive picture of government revenue commitments to long-term liabilities….

How to Take the Initiative in Health Care Bargaining

Source: Peter Knowlton, Labor Notes, July 12, 2016

….We know that the universal health care everyone deserves won’t be won in a single shop—but we’re laying the groundwork to set our sights higher in future fights that can bring workers together across a whole chain or geographic area.

We believe health care is a human right. We make that real with basic principles for what we propose:
– The employer can’t make unilateral changes to the plan design, providers, or amounts that workers pay.
– Any employee administration of health insurance must be done during work hours.
– Members have their choice of medical providers.
– There should be no forms to fill out. Plan documents should be easy to follow.
– Cost increases must not be shifted from the employer to workers.
– Eligibility for health insurance cannot depend on immigration status or employment status (such as job title, work hours, or wage rate).

We may not get all these principles, but they’re solid goals to shoot for. Attaining them eases workers’ financial and emotional stress. Members don’t have to worry so much about their own and their families’ health needs. Aren’t those pretty basic things to ask?

In the last few years, we’ve begun to add another principle:
– Employee paycheck deductions should be based on percentage of income, not percentage of premium…..

…..Steps to Mount a Health Care Fight
– Educate and involve members.
– Make comprehensive information requests. Find out exactly what the employer is paying to the health insurance company. If they’re trying to change your insurance, you will need lots of information.
– Ally with groups supporting single payer.
– Publicly blow the whistle on bosses trying to gut coverage.
– Target insurers and the legislature. Have the negotiating committee go visit the insurance company. Demand to meet with the CEO about how the proposed gigantic premium increases will affect your members. Go to the legislature and the governor, too—and let the media know about it. You could get some great publicity.
– Challenge employers to sign on to single payer…..

Preserving Retirement Income Security for Public Sector Employees

Source: Diane Oakley & Jennifer Erin Brown, National Institute on Retirement Security (NIRS), July 2016

From the summary:
This report finds that nearly all state retirement systems have features that allow for preservation of retirement income benefits, even for those employees who decide to change jobs.

When it comes to retirement finances, Americans have two top concerns: reliable, adequate retirement income that will not run out and the ability to move retirement plans from job to job. A new report from the National Institute on Retirement Security (NIRS) finds that public defined benefit (DB) pension plans stack up well on both counts.

Preserving Retirement Income for Public Sector Employees finds that almost all public retirement systems offer DB pensions that provide a modest, but stable retirement income that lasts through retirement. The research also finds that nearly all state retirement systems have features that allow for preservation of retirement income benefits even for employees who change jobs via the purchase of service credits, interest credits on withdrawn contributions and re-depositing of employee contributions.

Key findings of this report are as follows:
– Many public pension plans have adopted features that allow individuals who change jobs to retain and even increase their benefits. Employee contributions can follow employees to new employers, often at market or better interest rates. Most plans allow members to later rejoin a system and repay any refunds with interest.

– Nearly all public DB systems allow members to purchase additional service credits to increase their pension benefits in retirement. Specifically, all public DB plans allow for the purchase of service credits for prior military service, and more than half of the plans surveyed allow for the purchase of credits for prior out-of-state government service. Some plans allow for the purchase of credits for other specified types of service and leave.

– A number of plans have features that increase benefits for short or moderate-term employees. Modifications include increasing the value of the deferred annuity benefits paid to former employees, rewarding employees who choose to keep their member accounts in the plan with interest, and providing even higher matching amounts. These features can encourage workers who leave before retirement to preserve the lifetime retirement income benefits they have earned, rather than spend their refund.

The study results are based on a survey of 89 public pension plans to determine plan types, employee contribution rates, vesting requirements, interest rates paid on withdrawn employee contributions, refunds of member accounts, re-deposits of employee contributions and ability to purchase service credits. All survey results for the 89 public pension systems are published in the Appendices to the report. For systems that did not reply to the survey, data was obtained from the Public Plan database, National Association of State Retirement Administrators reports, and public pension plan web sites.
Replay of the webinar report release
Webinar PowerPoint

The Workplace and Health

Source: National Public Radio, the Robert Wood Johnson Foundation, and Harvard T.H. Chan School of Public Health, July 2016

A new poll of working adults in the U.S. by National Public Radio, the Robert Wood Johnson Foundation, and Harvard T.H. Chan School of Public Health was conducted to examine workers’ perceptions of health problems, experiences, issues, and challenges in the workplace. This poll sought to answer seven main questions related to health in the workplace:

1. What relationship do adults see between their workplace and their health?
2. What health benefits are offered to workers to improve their personal health, do workers use these benefits, and what are the reasons why they use or do not use these benefits?
3. What are the experiences of those who are working while they are sick or are caring for sick family members?
4. How does the workplace affect the health of different types of workers, including shift workers, workers in dangerous jobs, disabled workers, and workers in low-paying jobs?
5. How do jobs impact workers’ levels of stress?
6. How do adults rate their workplace in terms of supporting their health?
7. How do paid vacation benefits in the U.S. compare to Europe?

The findings of this survey demonstrate that a significant portion of working adults say that their current job impacts their health. In particular, a considerable share of working adults believe their current job affects their overall health, family life, social life, stress level, weight, eating habits, and sleeping habits. Almost half of all working adults give their workplace only fair or poor ratings in its efforts to reduce their stress. In particular, a majority of workers in low-paying jobs, dangerous jobs, disabled workers, workers in medical and restaurant jobs, and people who work 50 or more hours per week in their main job say their job has a bad impact on their stress level.

Working adults in our sample lived up to America’s reputation for being ‘workaholics,’ as almost two-thirds of them say they often or sometimes work overtime or on the weekends, and about one in five say they work 50 or more hours per week in their main job. Despite most working adults being offered paid vacation days by their workplace, less than half of all workers who receive paid vacation days have used all or most of them in the past year. On the issue of paid vacation, the U.S. also stacks up poorly compared to Europe: while nine in ten full-time working adults in the European Union (EU) have at least four weeks’ of paid vacation, less than four in ten full-time workers in the U.S. say that they are offered this same benefit.

A majority of working adults say they still go to work when they are sick. Half of restaurant workers and more than half of workers in medical jobs say they still go to work always or most of the time when they have a cold or the flu. Many workers have also had experiences in caring for family members who were seriously ill, injured, or disabled while working at their current job.

Overall, a majority of working adults say their workplace provides a healthy work environment, most say their workplace is supportive of them taking steps to improve their personal health, and about half say their workplace offers formal wellness or health improvement programs to help keep themselves healthy.
Work Can Be A Stressful And Dangerous Place For Many
Source: Joe Neel, NPR, July 11, 2016

Employers’ efforts to reduce stress get low grades in a new poll by NPR, the Robert Wood Johnson Foundation and Harvard’s T.H. Chan School of Public Health.

In particular, among those working adults who say they’ve experienced a great deal of stress at work in the past 12 months, the vast majority, 85 percent, rate the efforts of their workplace to reduce stress as fair or poor.

Overall, 43 percent of working adults told us their job negatively affects their stress levels. Others said their job negatively affects their eating habits (28 percent), sleeping habits (27 percent) and weight (22 percent)….

Poll: More than four in ten working adults think their work impacts their health /Most say their workplace is supportive of actions to improve their health
Source: Harvard T.H. Chan School of Public Health, Press Release, July 11, 2016

A new NPR/Robert Wood Johnson Foundation/Harvard T.H. Chan School of Public Health poll finds that more than four in ten working adults (44%) say their current job has an impact on their overall health, and one in four (28%) say that impact is positive.

However, in the survey of more than 1,600 workers in the U.S., one in six workers (16%) report that their current job has a negative impact on their health. Workers most likely to say their job has a negative impact on their overall health include those with disabilities (35%), those in dangerous jobs (27%), those in low-paying jobs (26%), those working 50+ hours per week (25%), and those working in the retail sector (26%).
Poll: More Than Four in Ten Working Adults Think Their Work Impacts Their Health /Most say their workplace is supportive of actions to improve their health.
Source: Robert Wood Johnson Foundation, Press Release, July 11, 2016

….Key Findings:
Chemicals and contaminants top list of biggest health concerns in the workplace ….
About one in four workers rate their workplace as fair or poor in providing a healthy work environment; about half are offered wellness or health improvement programs ….
A majority of ‘workaholics’ say they work longer hours because it is important to their career; half say they enjoy working longer hours ….
A majority of working adults say they still go to work when they are sick ….
Low-wage workers often face worse conditions than high-wage workers ….

Should Working in Retail Require a Health Warning?
Source: Erin Johansson, Jobs With Justice, July 12, 2016

A recent study has proven what millions of working people have known for years: Work is stressful, and many employers only make things worse.

Twin Threats: How Disappearing Public Pensions Hurt Black Workers

Source: Robert Hiltonsmith, Dēmos, 2016

From the introduction:
….As important as public employment is to the black middle class, the pensions provided by public employment are perhaps even more crucial to the retirement security of black workers. This brief uses data from the Current Population Survey Annual Social and Economic Supplement to examine the importance of public pensions to black retirement security, and why the twin threats to public pensions—cuts to state pension benefits and the decline in public employment over the past two decades—particularly threaten the retirement security of African American workers. We find that public pensions are vital to ensuring a decent standard of living for black retirees: the poverty rate among black retirees without public pensions is nearly 20 percent higher than the poverty rate among black retirees with public pensions—almost double the difference in poverty rates between all retirees with and without public pensions. These figures show that if the twin threats to public pensions continue, African American retirees may lose much of the retirement security they’ve gained over the past half-century…..

You’re getting a pension: What are your payment options?

Source: William J. Wiatrowski, U.S. Bureau of Labor Statistics, Beyond the Numbers, Pay & Benefits, Vol. 5 no. 9, June 2016

From the introduction:
For those workers who participate in a traditional pension plan—15 percent of private sector workers and 75 percent State and local government workers—the math exercise doesn’t end once you figure out your monthly benefit (often based on earnings and years of service). No matter how the plan calculates your benefit, retirees must have the opportunity to receive periodic payments for life and may be offered alternative forms of payment.

Sound confusing? It gets worse. To really understand the options, you need to remember those “time value of money” calculations if you’ve ever taken a finance class. In a nutshell, the plan is required to have sufficient assets to be able to pay you the required benefits for your lifetime. The various forms of payment in most cases simply distribute those funds differently. In its simplest form, a plan might have $200,000 in assets designated for your pension. You might be offered a lump sum of $200,000 or monthly payments of $1,050 for life. It may not seem like it, but these two payments are equivalent. Investing $200,000 at 4 percent interest provides a $1,050 monthly payment for about 25 years.

Because the options are designed to be roughly equivalent (more formally, the “actuarial equivalent”), your decision to choose one form of payment over another is not about the monetary value; other factors come into play, such as the need to provide benefits for survivors. This issue of Beyond the Numbers looks at the various payment options and what factors you need to take into account when making a decision. The accompanying charts provide a visual representation of different payment options.1