COMPENSATION, RETIREMENT AND BENEFITS TRENDS REPORT
NON-PROFIT INDUSTRY
2012/2013
Today’s Agenda
•
INTRODUCTIONS
•
BACKGROUND
•
COMPENSATION PRACTICES
•
HEALTH AND WELFARE BENEFITS
•
RETIREMENT PLANS
•
QUESTIONS
Discover the Verisight difference.
Call 855.751.2127, visit www.verisightgroup.com or email [email protected].
2012/2013 Compensation, Retirement and Benefits Trends Report
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POLLING QUESTION #1
•
Which best describes your organization type?
– Professional/membership/trade association
– Charitable organization
– Social Services (e.g. United Way, Red Cross, Salvation Army, etc.)
– Educational institution
– Other
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Today’s Presenters
Rena Somersan
Principal, Compensation Consulting Group, Verisight, Inc.
Rena has more than 19 years of consulting experience in
Non-Profit organizations, Healthcare, Manufacturing, and
other industries. Rena assists clients in executing their
strategic human resources and compensation initiatives.
Her focus has been in the areas of workforce and
executive compensation and performance management
initiatives, discussing the strategic direction of the
organization and overall Human Resources philosophy.
Martha Sadler
Executive Vice President, Benefits Consulting,
Verisight Inc.
Martha has over 20 years of experience in advising
businesses on retirement plan matters and leads the
Retirement Plan Consulting practice for the firm.
Martha specializes in assisting clients in detecting
and correcting operational and fiduciary failures. This
assistance includes navigating the available selfcorrection programs, preparing voluntary submissions
to the Internal Revenue Service or Department of
Labor, and representing the client in the event of a
governmental audit.
Jason Casey
Senior Vice President, Actuarial, Verisight Inc.
Jason joined Verisight in 2012 and is responsible for
overseeing the actuarial team and its future growth.
Jason brings over 15 years of retirement and health &
welfare consulting experience to Verisight. He brings
a unique skill set which combines a broad range of
benefits consulting and leadership expertise.
Prior to joining Verisight, Jason has held various
leadership positions at some of the largest national
consulting firms. More recently, Jason spent five
years at Fidelity Investments leading their benefits
consulting and actuarial practice in Chicago.
2012/2013 Compensation, Retirement and Benefits Trends Report
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Report Background
The annual Compensation, Retirement and Benefits Trends Survey is designed to uncover key trends
across the broad spectrum of retirement, health and welfare benefits and employee reward
programs. The result is a comprehensive view of firms’ total employee reward programs that is
rarely available from a single source.
Nearly 1,000 organizations (958) participated in the survey. The majority of the survey respondents
are mid-sized companies; however, small and large firms are also represented. Respondents reflect
a wide range of industry types including manufacturing, healthcare, construction, finance/banking,
distribution and services, with the majority of these industries organized as “for profit” entities.
Nonetheless, not-for-profit organizations participated notably at 12 percent. The online survey was
launched on August 21 and closed on October 21, 2012.
2012/2013 Compensation, Retirement and Benefits Trends Report
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Base = 958
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KEY DEFINITIONS:
Northeast
New England: Connecticut, Maine, Massachusetts, New
Hampshire, Rhode Island and Vermont
Middle Atlantic: New Jersey, New York and Pennsylvania
Midwest
East North Central: Illinois, Indiana, Michigan, Ohio and
Wisconsin
West North Central: Iowa, Kansas, Minnesota, Missouri,
Nebraska, North Dakota and South Dakota
South
South Atlantic: Delaware, District of Columbia, Florida,
Georgia, Maryland, North Carolina, South Carolina, Virginia
and West Virginia
East South Central: Alabama, Kentucky, Mississippi and
Tennessee
West South Central: Arkansas, Louisiana, Oklahoma and
Texas
West
Mountain: Arizona, Colorado, Idaho, Montana, Nevada, New
Mexico, Utah and Wyoming
Pacific: Alaska, California, Hawaii, Oregon and Washington
Base = 757
Note: Not all respondents provided demographic information
2012/2013 Compensation, Retirement and Benefits Trends Report
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2012/2013 Compensation, Retirement and Benefits Trends Report
COMPENSATION PRACTICES
2012/2013 Compensation, Retirement and Benefits Trends Report
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Factors Impacting Decisions
Employers continued to turn to a variety of labor cost containment measures in 2012 and anticipate
additional actions in 2013.
Which cost reduction and/or containment strategies have you implemented or plan to implement?
Non-Profit Industry Base = 88
All Industries Base = 704
Compensation Practices
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Factors Impacting Decisions
The cost of benefits remains the factor most often identified as having a significant impact on
organizations’ total compensation decisions for 2012.
What factors had significant impact on your total compensation/rewards (salary, bonus, benefits, and retirement) decisions for 2012?
Non-Profit Industry Base = 92
All Industries Base = 755
Compensation Practices
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Salary Increases
Please indicate the percentage amount allocated for base salary increases for 2013, as a percent of base pay.
2013
All Industries
Not-For-Profit
Mean
2.7%
2.9%
Median
3.0%
3.0%
Mean
2.7%
2.8%
Median
3.0%
3.0%
Mean
2.6%
2.7%
Median
3.0%
3.0%
Mean
2.7%
2.6%
Median
3.0%
3.0%
Mean
2.0%
1.7%
Median
2.3%
2.3%
Base
595
82
Executives
Salaried (Exempt)
Salaried (Non-exempt)
Hourly (Non-exempt)
Hourly (Union)
Includes zeros (i.e., salary freezes)
*Caution low base
Compensation Practices
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Salary Structures
The majority of organizations have a formal salary structure with grades, minimums, midpoints and
maximums to effectively manage compensation.
Do you have a formal salary structure (i.e., ranges with a minimum and maximum) to manage compensation across levels
within the organization?
Base = 767
Compensation Practices
Base = 94
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Salary Structures
Salary structures are anticipated to move anywhere from 1.4 – 1.9 percent, depending on the
employee group, in 2013.
Please indicate the percentage salary range/structure movement (only enter 0% if no adjustments were made or
anticipated for an employee category).
2012 Actual Salary Structure Adjustments
2013 Anticipated Salary Structure Adjustments
All Industries
Not-For-Profit
All Industries
Not-For-Profit
Mean
2.0%
2.0%
1.7%
2.0%
Median
2.0%
2.1%
2.1%
2.2%
Mean
1.9%
1.7%
1.9%
1.8%
Median
2.1%
2.0%
2.2%
2.2%
Mean
1.7%
1.6%
1.7%
1.7%
Median
2.1%
1.5%
2.1%
2.0%
Mean
1.7%
1.3%
1.7%
1.6%
Median
2.1%
1.7%
2.1%
2.1%
Mean
1.2%
1.1%
1.4%
1.3%
Median
0.9%
0.9%
1.2%
1.0%
Base
268
52
232
41*
Executives
Salaried (Exempt)
Salaried (Non-exempt)
Hourly (Non-exempt)
Hourly (Union)
Includes zeros (i.e., no adjustments)
Compensation Practices
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Compensation Philosophy
What is your organization’s total compensation philosophy?
Non-Profit Industry Base = 98
All Industries Base = 778
Compensation Practices
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Polling Question #2
•
How effective are the performance management practices at your
organization?
– Very effective
– Somewhat effective
– Hardly effective at all!
– We don’t have a performance management system
Compensation Practices
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Pay for Performance
A desire to incent performance is among the top factors impacting organizations’ total
compensation decisions in 2012. Therefore, it is not surprising that 52 percent of organizations have
implemented some type of pay-for-performance program.
Have you implemented any pay-for-performance programs within your organization?
Base = 773
Compensation Practices
Base = 93
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Pay for Performance
The gap between salary increases administered to high and low performers continues to widen and
increased by 1.2 percent of base pay compared to a year earlier.
In general, please indicate the average base salary increases in 2012 for each of the following categories.
Base = 646
Compensation Practices
Base = 84
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Polling Question #3
•
Would you say the variable compensation arrangements in place at your
organization are more akin to
– bonuses or “after the fact” or
– incentives “before the fact” formula driven
– We don’t currently offer variable compensation
Compensation Practices
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Incentive Plans
Eligibility for short-term and long-term incentive pay is substantially higher for executives and
salaried-exempt management than for hourly non-exempt workers.
Which employee groups are eligible to participate in a short-term and/or long-term incentive program?
Base = 737
Compensation Practices
Base = 86
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Incentive Plans
What is the targeted short-term incentive pay opportunity at your company for 2012?
Base = 365
Compensation Practices
Base = 37
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Incentive Plans
At the executive level, organization performance is the most common measurement criteria.
Performance for exempt employees is typically weighted based on both individual and organization
performance. For hourly employees, individual performance is the most common measurement
criterion, which allows employees to see a clear line of sight between objectives and rewards.
What performance measures are utilized to determine awards?
All
Industries
Non-Profit
Organization Performance
Non-Profit Industry Base = 71
Division/Department Performance
Individual Performance
All Industries Base = 673
Other Measures
Compensation Practices
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Incentive Plans
While most incentive plans are designed to set expectations up front, spot bonuses, which are
usually more subjective, are also utilized by 37 percent of responding organizations.
Do you offer spot bonuses to provide immediate rewards for performance above and beyond expectations?
Base = 744
Compensation Practices
Base = 92
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2012/2013 Compensation, Retirement and Benefits Trends Report
HEALTH AND WELFARE BENEFITS
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Health Insurance Options
Preferred Provider Organization (PPO) plans are still by far the most widely available health plan
option. For the first time, High Deductible Health Plans (HDHPs) edged out Health Maintenance
Organizations (HMOs) as the second-most prevalent type of health plan.
Which of the following plans do you offer as health insurance options?
Non-Profit Industry Base = 90
All Industries Base = 766
Health and Welfare Benefits
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Health Insurance Options
For employees, PPOs still remain the most frequently selected health plan followed by HMOs. HDHPs
are a distant third.
For 2012, which of the following health insurance options was selected by the largest number of employees?
Base = 355
Health and Welfare Benefits
Base = 39
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Health Insurance Plan Costs
One-third of organizations say that their health plan costs increased by at least 8 percent from 2011
to 2012, more than double the 3 percent rise in the Consumer Price Index over the same period.
What was the average percentage change in your health insurance plan costs for the 2012 plan year?
Base = 698
Health and Welfare Benefits
Base = 83
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Health Insurance Premiums
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.
For the health insurance option selected by the majority of your employees, what is your average total premium amount?
What percentage do your employees contribute to the premium amount?
All Industries
Not-For-Profit
$1,252
$1,390
$940
$1,164
Employee + Children
$889
$886
Employee Only
$539
$627
Base
570
65
36%
36%
35%
35%
33%
33%
Employee Only
22%
18%
Base
564
65
Average Monthly Premium
Family
Employee + One
(Spouse or Child)
Employee Share of Premium
Family
Employee + One
(Spouse or Child)
Employee + Children
Health and Welfare Benefits
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Actions to Reduce Healthcare Costs
Nearly 60 percent of employers indicate they are taking measures in 2012 to reduce healthcare
expenses. Once again, the most frequently cited action is raising the employee portion of the
premium.
What actions were taken for 2012 in your organization to address healthcare costs?
Non-Profit Industry Base = 73
All Industries Base = 624
Health and Welfare Benefits
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Actions to Reduce Healthcare Costs
Many companies intend to shift an even greater percentage of the cost of healthcare to their
employees in 2013.
What actions do you plan to take for 2013 in your organization to address healthcare costs?
All Industries Base = 547
Non-Profit Industry Base = 68
Health and Welfare Benefits
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Healthcare Reform
Currently 26 percent of employers are undecided on whether they will continue or discontinue
group health coverage in the next 24 months.
Due to healthcare reform, which action are you most likely to take in the next 24 months?
Base = 686
Health and Welfare Benefits
Base = 82
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Polling Question #4
•
In light of the “Pay or Play” healthcare reform provisions, what action is
your organization likely to take?
– Continue current group health care coverage
– Discontinue health plan & use state health exchange
– Undecided
Compensation Practices
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Healthcare Reform
More than three-quarters of employers claim cost is the most important factor in determining how
they will respond to healthcare reform.
What factors are most important in determining how you will respond to healthcare reform?
Non-Profit Industry Base = 83
All Industries Base = 689
Health and Welfare Benefits
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Other Benefits
In addition to health insurance, organizations generally offer a broad range of benefits including
dental insurance, life insurance, long-term disability, short-term disability and vision insurance.
Which of the following benefits do you currently offer?
Non-Profit Industry Base = 85
All Industries Base = 689
Health and Welfare Benefits
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Other Benefits
To help combat health insurance costs, employers are increasing their focus on wellness programs.
Please indicate which benefits you plan to improve in the upcoming year?
Non-Profit Industry Base = 16**
All Industries Base = 147
*Caution low base **Extremely low base
Health and Welfare Benefits
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Polling Question #5
•
How effective have the wellness programs at your organization positively
impacting your health care costs?
– Very effective (has helped reduce medical trend)
– Somewhat effective (has helped keep our medical trend flat)
– I don’t know the impact on our health care costs
– We do not have a wellness program
Compensation Practices
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2012/2013 Compensation, Retirement and Benefits Trends Report
RETIREMENT PLANS
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Polling Question #6
•
What type of retirement plan does your organization provide?
– 403(b)/401(k) (Defined contribution plan(s) w/employee contribs)
– Defined contribution plan with employer contributions only
– Defined benefit plan (non-frozen plan)
– Combination defined benefit & defined contribution plans
– No retirement plan
Retirement Plans
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Retirement Plan Types
Defined contribution plans continue to be the dominant retirement savings program across U.S.
companies, regardless of company size.
What type of retirement plan(s) do you offer?
Non-Profit Industry Base = 97
All Industries Base = 799
Retirement Plans
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Criteria for Choosing Providers
Managing plan costs continues to be an important issue for most employers. The cost of investments
and the cost of services, including plan fees, continue to be key considerations when evaluating
retirement plan offerings, regardless of size or industry.
Identify the top three items from the following list that you consider most important when evaluating your retirement plan offering.
Non-Profit Industry Base = 89
All Industries Base = 727
Retirement Plans
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Investment Options
As employers strive to attain appropriate investment diversification without overwhelming their
participants, providing choices to employees remains paramount.
How many investment options are participants able to choose from in your plan, excluding brokerage windows?
Base = 724
Retirement Plans
Base = 86
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Investment Options ̶ Default
Please indicate your Qualified Default Investment Alternative (QDIA).
Cash
Money Market
Stable Value
Asset Allocation
Target Date
Balanced
Managed Investment Accounts/Model Portfolios
Lifestyle
Base
Retirement Plans
All Industries
Non-Profit Industry
30%
17%
33%
14%
44%
13%
12%
9%
642
52%
10%
12%
0%
77
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Automatic Enrollment
More than one-third of organizations offer automatic enrollment. This suggests that auto-enrollment
is here to stay, as companies strive to secure and retain plan participants. Among organizations that
offer automatic enrollment, 31 percent include an automatic escalation feature.
Does your plan have an automatic enrollment feature?
Yes
31%
Base = 750
Base = 91
*Caution low base **Extremely low base
Retirement Plans
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Automatic Enrollment
More than one-third of organizations offer automatic enrollment. This suggests that auto-enrollment
is here to stay, as companies strive to secure and retain plan participants. Among organizations that
offer automatic enrollment, 31 percent include an automatic escalation feature.
If yes, does your plan include an automatic escalation feature?
Yes
31%
Base = 38*
Base = 280
*Caution low base **Extremely low base
Retirement Plans
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Polling Question #7
•
What type of employer contribution does your organization provide to
employees under your retirement plan?
– Match
– Non-match employer contributions
– Combination match and non-match
– Defined benefit contribution
– No employer contribution
Retirement Plans
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Employer Plan Contributions
Most employers embrace matching contributions as an effective inducement to plan participation.
Most common is a 100 percent match of employee contributions followed closely by a 50 percent
match.
Does your company offer matching contributions?
Base = 706
Retirement Plans
Base = 85
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Employer Plan Contributions
Most employers embrace matching contributions as an effective inducement to plan participation.
Most common is a 100 percent match of employee contributions followed closely by a 50 percent
match.
Please provide the matching percentages your company currently contributes.
Non-Profit Industry Base = 60
All Industries Base = 510
Retirement Plans
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Plan Costs and Participant Awareness
Disclosures are on the forefront of plan sponsors’ minds with 98 percent confirming receipt from
their plan service providers.
Did you receive a disclosure from all of your plan service providers regarding plan fees?
Base = 643
Retirement Plans
Base = 75
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Plan Costs and Participant Awareness
Disclosures are on the forefront of plan sponsors’ minds with 98 percent confirming receipt from
their plan service providers.
After reviewing fee disclosures from service providers, do you know the total cost of your plan?
Base = 643
Retirement Plans
Base = 75
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Plan Costs and Participant Awareness
Despite the survey launching in the midst of the participant disclosure delivery, 91 percent of
employers affirm that plan participants are provided with information necessary to understand the
full cost of the plan.
Are plan participants provided with information necessary to understand the full cost of the plan?
Base = 678
Retirement Plans
Base = 81
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Thank You for Attending
 Questions/contact us
[email protected]
 Download the complete report
http://www.verisightgroup.com/Home/Insight/Compensation,Reti
rementandBenefitsTrends.aspx
 Join us for the next web seminar:
Cash Balance Plans – Maximizing Retirement Assets and Minimizing Your
Tax Burden
Wednesday, September 18, 2013
Register for the web seminar by visiting the Plan Sponsor or Advisor login pages at
www.verisightgroup.com.
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