A survey of middle market executives by market research firms Verisight and McGladrey found 65 percent of respondents consider benefit costs the leading factor when considering compensation, while 61 percent of retirement plan sponsors are unprepared for new fee disclosure rules.
Changes are expected in April 2012, when new rules mandated by the Employee Retirement Income Security Act will be implemented. These rules will require more extensive fee disclosure to both fiduciaries and sponsors of 401(k) retirement plans, with more rules from the Department of Labor to follow in May. Reporting and HR compliance is expected to be difficult by many.
The survey found employers tried to avoid cutting benefits, with only 11 percent reducing or suspending 401(k) matching contributions and most avoiding steps such as hiring freezes. Despite these efforts, however, about a quarter of respondents indicated they had cut staff or increased the employee share of healthcare and benefit costs, while more than one-third reduced overtime pay.
According to analysts, cost control measures are likely to continue in the next 12 months. In particular, employers are expected to decrease their share of healthcare and benefit costs in favor of alternate measures.
