Author: Site Staff

The current financial climate isn’t just keeping those on Wall Street busy.

Benefits management departments in recent weeks have been fielding questions and addressing concerns from employees worried about their 401(k)s and other employer-sponsored investment vehicles as the stock market plummeted and continues to show signs of instability.

“Employers are very busy trying to keep an eye on what’s happening,” said Pamela Hess, director of retirement research for consulting firm Hewitt Associates Inc. in Lincolnshire, Illinois. “I think everyone is working a little overtime.”

Hess said some benefits departments have seen as much as a 20 percent increase in call volumes from concerned employees.

Barrie Christman, vice president of the individual investor segment at Principal Financial Group in Des Moines, Iowa, said call volume at the 401(k), mutual fund, retirement and investor provider’s call center has increased by 50 percent compared with normal volumes.

The increase in calls, though, doesn’t necessarily correlate with the number of people deciding to move their money or cease investing in their retirement accounts, Hess said: “In times like these we do see some movement, but by and large, people are staying the course.”

In September, the most recent period for which figures are available, she said about 1 percent of the assets in plans Hewitt tracks experienced changes. She said employees moved $900 million in assets from equities into fixed-income accounts. Nearly two-thirds of those assets were moved into stable-value funds, while the rest were shifted to bonds and money market investments.

Michael Pikelny, employee benefits manager for Hartmarx Corp. in Chicago, and Jack Towarnicky, associate vice president for benefits planning at Nationwide Insurance in Columbus, Ohio, said calls from concerned employees to either their benefits departments or their investment plan administrators have increased, but not by overwhelming amounts.

Towarnicky said employees seem most concerned about whether their money is safe. Pikelny said employees commonly call to find out whether the financial plan administrator is stable and what happens to their money if the plan administrator goes out of business. Employees also want to know if their investments are well diversified, according to the mutual fund firms.

Once their questions have been answered, so far, few people have changed their investments, firms said. However, Pikelny said, some employees have cut back on the amounts they are contributing to their accounts.

A spokeswoman for investment management company Vanguard Group in Valley Forge, Pennsylvania, said it was still too early in the financial downturn to tell if workers would continue to resist pulling their money out of the market entirely or transfer their money into different investment options.

While most employees are not making significant changes to their investments, Hess said, more calls inevitably result in more transactions and more activity. According to a report released by AARP in early October, 13 percent of Americans 45 and older are prematurely withdrawing funds from their 401(k)s, IRAs or other investments to cover day-to-day expenses.

“Retirement Security or Insecurity? The Experience of Workers Aged 45 and Older,” which surveyed 1,628 workers 45 and older, also found that because of economic changes over the past 12 months, 20 percent of respondents have stopped contributing to a 401(k), IRA or other retirement account. Additionally, the report concluded 65 percent of respondents will delay retirement and work longer should the economy not improve significantly.

Bill McClain, a Seattle-based principal for human resources consulting firm Mercer, said that although some people will move their investments to the most conservative funds, he doesn’t foresee a rush to invest in stable-value accounts. Most people will probably stay the course with their current investment vehicles, he said.

“I don’t think it’s going to be a wholesale movement,” he said. “The power of inertia is still pretty powerful.”

Preventing employees from making rash decisions about their investments requires a robust and timely communication plan from the employer or the plan sponsor, or both, experts said. Sam Templeton, a communications consultant for Watson Wyatt Worldwide in Seattle, said that to keep up with the ever-changing news in the markets, employers should respond quickly, communicating through intranets, e-mail and HR contacts or managers, rather than through printed brochures.

“The situation is so fluid, it’s somewhat of a challenge,” Templeton said. “It’s keeping benefits departments quite busy. They need to get information out very quickly.”

Employers should reassure employees of the safeguards and protections on their investment accounts, reiterate the importance of diversifying investments and encourage employees to review their investments, but discourage them from panicking, he said.

Towarnicky said the Nationwide benefits department has increased communication regarding investment portfolios to its employees, particularly through e-mail and the company’s HR portal.

The company is reminding employees that retirement saving requires long-term—not short-term—thinking, and that that the company matches contributions and is encouraging them to continue saving, he said. Nationwide directs all other specific financial questions to its investment administrator.

Hartmarx, for the most part, is simply directing employees to its mutual fund provider, Vanguard, for information, Pikelny said. The firm is offering webinars and has a plethora of information on its Web site that typically answers any concerns, he said.

It’s critical that employers are careful to not offer financial advice for which they could be held liable, Hess said. She said employers should simply make sure employees understand the resources available to guide them through turbulent times.

“It’s a fine line employers have to walk,” she said. “They want to give out information to reassure employees, but they don’t want to overwhelm them and tell them what to do.”

Filed by Kristin Gunderson Hunt of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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Many people give little thought to the possibility of an accident—and disability—happening to them. But accidents or illnesses that force workers into disability do happen. Millions of people in the U.S. are receiving Social Security disability benefits—many of them younger than 50. Employers who want to provide information to their workforces about disabilities, their causes and prevention may find it useful to link from their intranets to the Council for Disability Awareness. The site has useful information, as well as links to resources such as the American Heart Association, the Social Security Administration and DisabilityInfo.gov.

The Pension Benefit Guaranty Corp. lost $4.1 billion, or 6.5 percent, on its investments in fiscal 2008 ended September 30, director Charles E.F. Millard testified Friday, October 24.

The PBGC had total assets of $68.4 billion at the end of the previous fiscal year, according to written testimony Millard submitted.

He told the House Education and Labor Committee in Washington that he estimated the PBGC’s deficit would decline to $10 billion to $12 billion at the end of fiscal 2008, down from the $14 billion deficit of a year earlier.

Rep. George Miller, D-California, the committee’s chairman, called the hearing over concern that a new Pension Benefit Guaranty Corp. investment policy adopted in February could lead to additional investment losses for the agency. But Millard said the fiscal 2008 losses had resulted from the more conservative agency investment policy that was previously in place.

Under the new policy, 45 percent of the agency’s $55 billion in investible assets will be in equities, 45 percent in fixed income and 10 percent in alternatives, including private equity and real estate. Previously, 75 to 85 percent of assets were in a liability-driven investment strategy, with the remainder in stocks.

“We have not made the shift yet, even though we are preparing to do so,” Millard testified. “The PBGC is actually sounder today than it was 12 months ago.”

 Millard also said he couldn’t guarantee that the new investment policy would be successful, only that it would improve the prospects that the agency would be able to eliminate its budget deficit over time.

 Miller vowed continued scrutiny of the agency’s implementation of the new policy. “I’m not sold on it at this point,” he said.

After the hearing, a committee news release said the Pension Benefit Guaranty Corp. had lost $4.8 billion in equities during fiscal 2008, including a $1.7 billion loss in September alone. A PBGC spokesman said the losses in stocks were partially offset by gains in the PBGC’s fixed-income portfolio.

Filed by Doug Halonen Pensions & Investments, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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It’s open enrollment for millions of employees in the United States. For some, it’s a daunting task, no matter how easy employers try to make it for them. MetLife provides the following suggestions for employees to help them make important health care decisions for themselves and their families. Feel free to incorporate these points into your own open enrollment communications to employees:

    Take time to do your homework: Make sure you thoroughly research which benefits are right for you. The benefits you select for the coming year can have a significant impact on you and your family’s finances, so be sure to spend enough time researching and selecting your benefits. You should plan to spend as much time—if not more—as you would when you research other products and services such as a new computer or a flat-screen TV.

    Read the proverbial “big envelope” and use online tools: Employees who have the information at their disposal to make an informed decision are almost three times more likely to feel confident about their benefits selections. Therefore, it’s important for you to read open enrollment materials from cover to cover. You don’t want to be the person who doesn’t read the fine print only to realize your oversight when you get the bill for that specialist visit. Many companies also encourage workers to read about their benefits offerings online, and some even offer Web-based calculators and tools.

    Plan to make some changes each year: Open enrollment is an opportunity to re-evaluate your options and make changes. Very few people have the same benefits needs year after year. Make sure you consider changes or coverage increases, particularly if you’ve experienced a recent life event, such as getting married, having a baby or purchasing a home.

    Don’t assume that a bumpy economy means you’ll have fewer benefits choices: Over the past few years, employers have expanded the breadth of their benefits offerings significantly—especially when it comes to voluntary benefits, which are paid for by the employee, typically at a significant cost savings due to group rates. To meet the needs of an increasingly diverse workforce (and help retain top talent), many employers add new voluntary offerings each year—and the premiums for many can be paid through payroll deduction. Aging parents? Think about long-term care insurance. Sole breadwinner? Consider disability insurance. Buying a home? Access a legal-services plan. Have a dog? Ponder pet insurance. New apartment? Look into renters insurance.

    A pay raise changes things: If you are fortunate enough to get a salary increase in this challenging economic environment, consider increasing your 401(k) contributions and disability insurance coverage.

    Take advantage of pretax accounts: If your employer offers a flexible spending account for health care expenses or a 401(k) company match, consider this free money. Even if finances are tight, don’t forget your future—would you rather give up your morning latte and manicures, or work into your 80s because you don’t have the savings to retire?

    Ask, ask, ask: If you aren’t satisfied with your benefits or the enrollment process, let your employer know. Ask for the guidance and advice you need. Inquire about the possibility of meeting face to face with your HR department. Employers have an interest in making you happy—86 percent of employers view benefits as an important retention tool.

Dear Learning as You Go:

An absolute for high performance is to ground an organization in solid learning principles and action. Learning is the foundation of success for all organizations. The more structures that organizations have in place for learning, the more they will drive their mission and competitive advantage. When people learn new knowledge, skills, tools and techniques, they leverage their position to achieve goals. The key is that people must apply what they have learned to areas important to them at work.

Most organizations fail miserably at getting people to apply new skills. Typically, employees attend a training event (spending time away from their jobs) only to return once again to face the same pressures and problems they faced earlier. Going away for training does not mean our work goes away. In many ways, applying new knowledge is revolutionary thinking because so many organizations do not have the right system in place to engage short- and long-term skills application.

The field of adult learning was pioneered by Malcolm Knowles in the 1970s. While times have changed, not much has changed with regard to how adults learn. Knowles’ work is based on psychology, which focuses on cognition (they way we think), motivation (the things that get us going) and behaviors (the things we do). In order to ensure a successful learning strategy and execution, there are a number of key adult learning principles that Knowles has identified as being fundamental. In this context, the principles are universal and can be applied for all areas of learning, including those in the technical arena.

Knowles’ Adult Learning Principles
Learning is autonomous and self-directed. People want to feel a sense of independence and practice self-direction in achieving their learning. The implication is that opportunities must be made available for people to get involved in their learning. Instead of lecturing, facilitators must engage people in the learning process. Learners must be active participants, using simulations, case-study analysis, team projects, blended learning and stretch assignments.

It leverages people’s experience and knowledge. Adult learners bring a significant amount of experience and knowledge to the table. They will filter new knowledge and skills through this lens and make judgments accordingly. If information is against what they believe, they will be resistant to change. However, if new insights are aligned to their interests and preferences, they usually will engage in acquiring new skills.

It is goal-oriented. By nature, most people are goal-oriented. As a result, it is important to pay attention to adult learners and their goals. By structuring learning early on to assess participants’ goals, you will find that people are better able to link learning that is meaningful, exciting and relevant.

Relevancy is important. Adult learners will maximize their new skills acquisition significantly more when they find the learning relevant for them. People need to see how the learning relates to their job, department, goals and organization.

Focus on practicality. If the topics are outside the learner’s comfort level or learning ability, the learning will fail. Take time to ensure the curriculum is structured in such a way to match the audience’s ability to learn and apply principles.

In beginning a new learning program, the principles of adult learning can help guide the structure and curriculum. In addition, it is also important to consider other areas for the program. These include commitment from senior leadership, alignment to business, core competencies, measures of assessment, values integration, coaching and mentoring, external collaborations, learning alumni network, learning accountability and establishing a learning culture.

SOURCE: Dana E. Jarvis, Duquesne University, Pittsburgh, August 28, 2008

LEARN MORE: Regardless of its structure, any corporate learning tends to be more useful when trainers come from business units.

The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion. Also remember that state laws may differ from the federal law.

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Dear Workforce Newsletter

The recent victory of the International Association of Machinists and Aerospace Workers in its negotiations with Boeing may seem to be a boon to the labor movement, but observers say it’s an anomaly.

On Monday, October 27, the union and the Seattle-based airplane manufacturer came to a tentative agreement following a seven-week strike.

Under the terms of the agreement, Boeing’s 27,000 union-member employees will receive annual wage increases of 15 percent over the life of the four-year contract. Workers will also receive bonuses totaling at least $8,000 per worker for the first three years.

Health care benefits will remain the same despite Boeing’s attempt to move toward more cost-sharing with employees.

Most significantly, however, the new contract, if approved, will provide Boeing’s workers with greater job security, experts say. Under the agreement, Boeing can use contractors for the delivery of aircraft components to assembly lines, but the union workers will handle those components once they enter the factories and will oversee their delivery to their final destinations.

While this was a significant win for the machinists union, this group of workers is in a very unique position, said David Gregory, professor of law at St. John’s University in Queens, New York.

“These are highly skilled workers doing a critical job for a profitable employer that has huge demand for its product,” he said. “It’s the perfect storm in reverse.”

Despite the favorable situation for the union, its victory should serve as a good sign for the labor movement, said Josh Freeman, a professor of history at City University of New York Graduate Center.

“People will pay attention to the fact that in some circumstances being militant can succeed,” he said.

The most surprising part of the union’s victory was that Boeing held out as long as it did, Gregory said.

If anything, this should be a lesson to companies that acting too aggressively in negotiations can backfire, said Gary Chaison, professor of industrial relations at Clark University in Worcester, Massachusetts.

“Boeing pushed too hard by publicizing its offer and stating that it was final,” he said. “In my opinion, this was a strike that didn’t have to happen.”

Union members are expected to vote on the agreement in the next few days.

—Jessica Marquez

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Members in consumer-driven health plans are more cost-conscious and engaged consumers than enrollees in other plans, a new survey by the Washington-based Blue Cross and Blue Shield Association has found.

The BCBSA 2008 CDHP Member Experience Survey, which was presented Monday, October 20, at the Consumer Driven Healthcare Summit in Washington, found that 72 percent of CDHP members track their health expenses, compared with just 40 percent of their non-CDHP counterparts.

In addition, 38 percent of CDHP members estimate future health expenses, compared with 22 percent of nonmembers; 24 percent of members contacted their insurer to discuss health expenses, compared with 18 percent of nonmembers; 38 percent of members discussed health expenses with their physicians, compared with 27 percent of nonmembers; and 34 percent of members developed a budget for health expenses, compared with 18 percent of nonmembers.

CDHP members are also more engaged in health and wellness, the survey reported. For example, 43 percent of members participated in health screenings, compared with 30 percent of nonmembers. In addition, 25 percent of members reported exercising regularly, compared with 14 percent of nonmembers.

CDHP members with health savings accounts are more likely to access preventive care services than are CDHP members without such accounts or non-CDHP members. For example, 69 percent of HSA-eligible CDHP plan members with HSAs had regular checkups, physicals or preventive health screenings, compared with 64 percent of HSA-eligible CDHP members without HSAs and 62 percent of non-CDHP members.

CDHP members with employer-sponsored coverage are much more likely to open HSAs when their employers contribute to the accounts, the BCBSA survey found. Seventy-one percent of members who received some employer contribution either have already opened or plan to open an HSA, compared with 48 percent of CDHP members who did not receive an employer contribution to the accounts.

In 2007, 12.5 million people were enrolled in CDHPs, up 25 percent from 10 million in 2006, according to the American Association of Preferred Provider Organizations. The largest growth was among CDHPs linked to health savings accounts, which in 2007 covered 5 million plan members, up from 3 million in 2006. Enrollment in CDHPs linked to health reimbursement arrangements held steady at 7 million.

The survey, conducted by the BCBSA in August 2008, collected responses from 2,791 individuals ages 18 to 64 enrolled in private health insurance coverage, including BCBS-member CDHPs and non-member CDHPs. Currently 4.4 million BCBS plan members are enrolled in CDHPs, up 50 percent from last year.

To view a webcast of the entire CDHP survey presentation, visit www.bcbs.com/news/bluetvradio/consumerdriven2008.

Filed by Joanne Wojcik of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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The rate of workplace injuries and illnesses in private industry declined for the sixth straight year in 2007, the U.S. Department of Labor’s Bureau of Labor Statistics said Thursday, October 23.

The bureau said the number of nonfatal workplace injuries and illnesses reported by private employers declined from 4.4 cases per 100 workers in 2006 to 4.2 cases in 2007.

Edwin Foulke, assistant secretary of labor for occupational safety and health, and Elaine Chao, secretary of labor, said the decline was largely due to workplace safety education, training and enforcement of guidelines.

Filed by Jeff Casale of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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Nissan North America will give its U.S. factory workers an extra month to reconsider whether they really want to take the automaker’s rich buy-out plan.

A recent statement issued by the company said the mid-November extension was prompted by the alarming economic news of the past several weeks. (Click on “Chrysler” and “General Motors” for related news from the automakers.)

“We realize the uncertain economic climate could result in an employee reconsidering his or her decision,” the statement said. “Because of that, we are extending the consideration period.”

The buyout is offering workers up to $125,000 in hopes of reducing the workforce at two Tennessee factories by about 1,200 people. Nissan’s Smyrna, Tennessee, assembly plant and its Decherd, Tennessee, engine plant employ about 6,600 people, not all of whom are eligible.

The automaker has been tight-lipped about the number of people who have expressed interest in the buyout. One company source said that more than twice as many people as expected—as many as 2,800 employees—initially opted to leave, surprising officials in the United States and Japan.

Steve Parrett, manufacturing spokesman at Nissan’s Nashville headquarters, said he has not heard a specific number and that company officials would not discuss the numbers.

He acknowledged that the program “has been very well received.”

The offer consists of a lump sum payment of $100,000 or $125,000, depending on tenure, plus a year of health coverage and a car purchase discount.

Workers can also opt to accept a buyout in 2009 or 2010, but for a reduced amount of money. According to the recent  statement, employees opting for those later buyouts now have until next year to decide whether to accept.

Filed by by Lindsay Chappell of Automotive News, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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Companies in the S&P 500 could face their largest pension deficit ever because of this year’s financial crisis, according to a new report.

At the end of 2007, S&P 500 companies’ pension plans were overfunded by $63 billion—the highest since 1995, according to the report by S&P analyst Howard Silverblatt. Companies predicted an 8 percent return on assets in 2008, but “any pension fund manager that is even breaking even this year is most likely demanding a bonus,” he wrote.

Pension funds of S&P 500 companies have 61 percent in equity, 28 percent in fixed income, 4 percent in real estate and 7 percent in other investments.

“The U.S. market is down over a third, and that’s good compared to the emerging markets that are down over half this year alone—so that 61 percent in equity may not be doing that well,” Silverblatt said in the report. “When you calculate it all out at the current market returns, or even assuming a nice Q4 rebound, you get a number that is worse than the $219 billion in underfunding reported in 2002.”

He said the solution to the problem is “large unplanned cash infusions.”

Silverblatt predicts that few companies will remain overfunded, which will result in more disappearing defined-benefit plans.

Filed by Timothy Inklebarger of Pensions & Investments, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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