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5500 Preparer's Manual for 2012 Plan Years
The premier resource in the field of Form 5500 preparation, 5500 Preparer's Manual will help you handle the required annual Form 5500 filings for both pension benefits and welfare benefit plans.
From Spencer's Benefits Reports: With 25% of the work force nearing retirement age, an increasing number of companies are considering implementing phased retirement programs, according to a recent survey conducted by Hewitt Associates.
Hewitt’s survey of more than 140 midsize and large employers revealed that more than half (55%) already have evaluated the impact that potential retirements could have on their organization; and 61% have developed or will develop special programs to retain targeted, near-retirement employees. While only 21% of firms believe that phased retirement is critical to their company’s human resources strategy today, that number nearly triples to 61% when employers look ahead five years. According to the survey, 47% of companies indicated that they have some type of phased retirement arrangement available to their employees, but only 5% actually have formalized those programs. Nearly 40% expressed an interest in establishing a phased retirement program in the future.
“With the rising tide of boomer retirees, employers will be losing key talent at a time when attracting and retaining skilled workers will be more important than ever,” explained Allen Steinberg, a principal at Hewitt. “At the same time, rising medical costs, lengthening life spans, and the declining prevalence of traditional pension and retiree medical benefits mean that employees will either have to work longer, save more, or live with significantly less than they are accustomed to. As these trends converge, we believe phased retirement programs will continue to become more attractive options for both employers and employees.”
According to Hewitt, while employers increasingly are interested in adopting phased retirement programs, they are taking a number of steps to better understand how these programs can be structured as effective talent retention tools, including the following:
Increasing information gathering. Of those companies that have begun gathering information, nearly two-thirds (63%) use general industry research and discussions with key business leaders and managers as a way to gather information on phased retirement programs. Twenty-two percent currently gather formal input from near-retirement employees, but that number is expected to more than double to 54% in the next few years. In addition, while less than 30% of companies currently look at diversity data, 41% reported that they were likely to do so in the future.
Understanding drivers and barriers to effective retention programs. According to the survey, 72% of firms reported that retaining the experience, knowledge, and skills of older workers was the most important benefit to them in offering phased retirement programs. Other key employer benefits include easing the difficulty of replacing key skills (52%) and helping with transfer of key skills from experienced to inexperienced workers (50%).
A majority of employers (86%) reported that one of the largest benefits to near-retirement employees was the ability to gradually transition from the active work force to retirement. Employers also believed that phased retirement programs benefited workers by providing additional income to supplement their retirement income sources (67%) and/or providing workers with access to employer-subsidized health care (60%)—both of which have become increasingly important as health care costs continue to rapidly increase and as pension and retiree medical benefits continue to erode.
In assessing the most successful ways to retain near-retirement workers, employers have determined that alternative work arrangements represent a critical component. Nearly two-thirds (65%) of employers reported that offering part-time employment (on a year-round basis) represented one of the most effective ways of retaining near-retirement workers. In addition to part-time employment, 37% of employers noted that giving near-retirement employees access to retirement benefits would be effective in retaining talent.
While phased retirement programs bring considerable benefits to both employers and employees, Hewitt’s survey found employers also face potential challenges as they contemplate adopting or expanding these arrangements. More than half (52%) of firms believe that there are significant legal and regulatory barriers. However, a variety of internal issues represent many challenges, including company culture (cited by 42% of companies), lack of support from senior leadership (25%), and manager resistance (20%). In addition, concerns about costs (34%) and that phased retirement programs might accelerate the loss of talent (30%) also were cited.
Reconsidering rehire policies. While nearly half of employers (45%) indicated that they currently have policies in place that limit the ability to rehire retirees, a significant portion (46%) reported that they were likely to review their rehiring policies in the future.
Defining and measuring success. Nearly all companies (92%) reported that retention of skills, knowledge, and/or experience—cited by employers as the most important reasons for offering phased retirement programs—were among the most important factors in determining the success of those programs. Seventy-five percent of firms cited employees’ desire to gradually transition into retirement as important, and nearly half (49%) indicated that employees’ ability to qualify for health care benefits was critical to the success of their phased retirement arrangements.
Of the companies that already have phased retirement arrangements in place, 32% reported that they were satisfied with their programs. Ironically, only 14% indicated that they actually measure the success of their programs. In fact, nearly three-fourths (70%) of firms reported that they have no measures in place and no plans to implement a measurement strategy in the future.
For further information, visit http://www.hewitt.com.
For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.
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