Magazine article Workforce Management

The New Balancing Act

Magazine article Workforce Management

The New Balancing Act

Article excerpt


Companies might have spent the past several years revamping and fine-tuning their benefits offerings, but in a matter of months, it's become crystal clear that there are still some major cracks in the employer-sponsored benefits system. Trillions of dollars have vanished from retirement plans in a blink. Millions of older workers say they are now unable-or are simply too fearful-to retire. Scores of corporations are saddled, once again, with underfunded pension plans and may soon be burdened with their largest pension deficits ever. And at a time when they can afford it the least, both employers and employees are still trying to cope with soaring health-care costs.

It's a bleak scenario no matter how it's spun and represents the downside of trying to do the right thing for employees. After all, benefits are not mandatory; they are precisely what they are described to be: benefits.

All of these latest developments, of course, are the ravages of an unrelenting economic downturn that's being billed as the most severe financial crisis since the Great Depression. Incredibly, it's occurring only a year after equity markets were hitting all-time highs nearly every day-way back when many baby boomers saw retirement as a reality (if not a certainty), as opposed to just a fleeting fantasy.

It underscores, in grand fashion, just how vulnerable companies and their workers' benefits still are to volatile and unpredictable economic conditions. There are clearly few places to hide, and employee benefits are far from immune to the turmoil, no matter how sophisticated the employer may be.

For better or worse, however, economic dislocations often serve as the catalysts for change, and benefits are clearly a candidate for alterations.

When companies are looking for ways to stop the bleeding and mend their bottom lines in trying times, benefits often become a logical target.

And with a new president in place, seemingly every benefit issue-whether it's reforming the health-care system or firming up 401(k)s-will be on the table when Congress kicks off a new session.

"Employers need to be mindful of the risks, not just the costs, that are associated with any changes made to their benefits platform in the near term," said Cecil Hemingway, executive vice president and head of the retirement practice at Aon Consulting. "Quick fixes can have long-term business implications well beyond the next financial statement or the next election. …

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