Voluntary Benefits Portfolio

A Double Whammy for Public Sector Employees

Face a combined challenge of shrinking budgets and an aging workforce

NEW YORK, December 16, 2015 – Public sector employers in both state and local governments, as well K-12 schools, are facing budget constraints that are causing them to rethink their benefits strategies and find ways to balance costs with employee needs, according to MetLife’s 13th annual U.S. Employee Benefit Trends Study.

A full report examining these findings is available on MetLife.com/PublicSector.

“Public sector employers are working against a number of headwinds: facing an aging workforce, they need to design robust and comprehensive benefits programs that will help attract and retain younger workers, but they must do this while working with decreasing budgets,” says David MacLean, Vice President, Public Sector Sales, MetLife. “The good news is that voluntary benefits, paid by employees, can be an effective tool in meeting these needs. And, employees are willing to share the cost of benefits, with 44% of government employees saying they would prefer to bear more of the cost of their benefits rather than losing them.”

A Focus on Cost Control

For K-12 employers, costs associated with employee benefit offerings—particularly those related to healthcare—are top of mind, with 79% stating that their most important benefits strategy is optimizing their plan designs to reduce costs to the organization. Nearly two-thirds (63%) are concerned with having to pay additional costs as a result of Health Care Reform.

As a result, K-12 employers are moving toward a health benefits strategy that requires a more active role from their employees, including increased copays (45%) and deductibles (45%). There is similar movement among their colleagues in government, with one quarter of government employers planning to change employee copays and deductibles and more than one-third having already begun the process of increasing these out-of-pocket costs.

An Aging Workforce

With baby boomers ages 51+ making up the largest employee group in the public sector workforce, employers are thinking about how to optimize benefits to attract and retain more Millennial employees. However, 50 percent of government employers say retaining Millennials is extremely challenging.

44% of government employees [say] they would prefer to bear more of the cost of their benefits rather than losing them

Public sector employers have an opportunity to specifically target Millennials with benefit communications and decision support during open enrollment—easy-to-understand benefit materials can help to encourage trust and loyalty.

“Compared to their Gen X and Boomer counterparts, Millennial K-12 employees have the lowest confidence in their benefit choices, with only 24% reporting they were confident in their decisions during the last enrollment period,” adds MacLean. “Employers who are looking to attract, retain and improve workplace satisfaction of employees across generations should pay attention to these generational differences as they develop their benefits programs.”

But even while targeting millennials, public sector employers should not forget their current aging workforce. For these employees, retirement and retirement benefits are of critical importance to government employers and employees.

“The study found that more than one third of the government workforce expects to retire between the ages of 60 and 65. Nearly half of these government employees are extremely concerned with the status of their retirement savings,” notes MacLean. “Half of all K-12 employees are concerned about outliving their nest eggs. Because of these concerns, benefits that boost post-retirement quality of life can be extremely valuable.”



Research Methodology
MetLife’s 13th Annual U.S. Employee Benefit Trends Study was conducted during November of 2014 through January 2015 and consisted of three distinct studies fielded by ORC International, one of the world’s largest research companies. The employer survey comprised 2,595 interviews with benefits decision makers at companies with staff sizes of at least two employees. The employees survey comprised 2,463 interviews with full-time employees ages 21 and over, at companies with at least two employees. The broker survey comprised 699 interviews with brokers and consultants who sell employee benefits to companies of all sizes. MetLife defines public sector to include non-Federal government entities and publically funded primary and secondary educational organizations.
About ORC International
ORC International is a leader in the art of business intelligence. Their teams are passionate about discovering what engages people around the world. By combining quality data, smart synthesis and best in class digital platforms, ORC delivers insight that powers the growth and drives the future of their clients’ businesses. To learn more about ORC International, visit their website,www.orcinternational.com.
About MetLife
MetLife, Inc. (NYSE: MET), through its subsidiaries and affiliates (“MetLife”), is a leading global provider of insurance, annuities and employee benefit programs. MetLife holds leading market positions in the United States, Japan, Latin America, Asia, Europe and the Middle East. For more information, visit www.metlife.com.