Transcript Slide 1

We’ll give you an edge®
The Principal® has the retirement, investment, insurance
and savings solutions to help build your big
dreams.
1
Solid and stable
130 year history
Serving more than 18 million customers
More than $280 billion in assets under management
Solid performance with continued growth
Positioned for the future
…through multiple recessions, recoveries, market
challenges
*Statistics
as of 12/31/2009
2
Trust a
RETIREMENT
LEADER
Need help building
retirement savings?
#1 service provider of
retirement plans1
• Award-winning web sites2
• Extensive education
resources
• Convenient service
1 Defined
3
Contribution: 2008 PLANSPONSOR Recordkeeping Survey;
Defined Benefit: Investment Advisor Magazine, November 2008;
Nonqualified: PLANSPONSOR Deferred Compensation Survey, December
2008; ESOP: PLANSPONSOR Recordkeeping Survey, June 2008. 2 Ranked
No. 1 by DALBAR for plan sponsor and No. 7 for plan participant Web
sites for Defined Contribution plans (August 2009). Received the DALBAR
Seal of Excellence for defined contribution plan participant and plan
sponsor Web sites (September 2008).
Expand your
INVESTMENT
OPTIONS
Your future deserves patience
and discipline.
More than $280 billion1
in assets under management
(including assets for 12 of the
largest 25 pension plans in the
world2)
•
•
•
•
1
2
Mutual funds
Annuities
IRAs
Stocks and bonds
As of 12/31/2009
Pension & Investments P&I 1,000 Report, January 2009
4
Rely on a
LEADING
INSURANCE
PROVIDER
Be ready for whatever life
throws at you.
Over a century of
experience and service
•
•
•
•
•
5
Life insurance
Disability income insurance
Health savings accounts
Estate planning
Health & Wellness
Consider our BANKING
and TRUST SERVICES
The building blocks of a
financial strategy.
Available 24/7/365 via
www.principalbank.com
• CDs, CD ladders and IRAs
• Money market and
savings
• Health savings accounts
• Checking with free BillPay
• Credit cards
1
Pension & Investments/Watson Wyatt World's 300 Largest Manager
Survey, September 2008
6
Background
The Principal 10 Best Companies for
Employee Financial Security
– Companies with 5 – 1,000
employees
– 9 years
– 5,889 nominations
– 90 winning companies
– Judged by panel of
independent, industry experts
– Do not need to be a customer
of The Principal
– More information at
www.principal.com/10best
7
The Business Case for Great Benefits
8
Building the case for benefits
Increased retention/Reduced turnover costs:
Reduce Voluntary Turnover
The Principal 10 Best Companies
turnover rate:
7.1%
9
National
turnover rate:
24%
Source: The Principal 10 Best Companies for Financial Security, 2010; Bureau of Labor
Statistics
Building the case for benefits
Increased retention/Reduced turnover costs:
Reduce Turnover Costs
• Assumptions
– Employees
100
– Average Pay
$40,000
– Total Payroll
$4,000,000
– Turnover Cost
per position
100% x 40,000 = $40,000
• Cost of turnover at 8.9% = $356,000
• Cost of turnover at 22.6% = $904,000
• Cost of additional turnover = $548,000
10
Building the case for benefits
Improve Bottom Line Results
20%
16.1%
57%
more revenue per
Companies with
effective health
coverage and
productivity
programs achieve:
employee
higher market
value
higher
shareholder returns
11 Source:
2007
“Building an Effective Health & Productivity Framework” – Watson Wyatt
The Principal Financial Group
Achieving Different Results
The formula for success:
FINANCIAL
FITNESS for
employees
12
+
PHYSICAL
FITNESS for
employees
=
FISCAL FITNESS
for the business
10 Best Companies Devote a High Share of
Their Total Compensation Package to
Benefits
Two-thirds devote at least 30 percent of the total compensation
package to benefits.
40% or more
30% to 39%
20% to 29%
Less than 20%
13
Source: The Principal 10 Best Results 2004-2010
Building the case for benefits
Benefits program basics
What do we mean by “benefits?”
• Retirement benefits
• Health benefits & wellness programs
• Specialty benefits (employer provided and voluntary)
– Life (and accidental death and dismemberment)
– Dental
– Disability
– Long-term care
– Vision
14
Building the case for benefits
Top 5 most valued workplace benefits
(Gen X and Gen Y combined)
15
Source: “Preparing for Their Future: A Look at the Financial State of Gen X
and Gen Y” – 2008 ASEC and AARP
Best Practices in Employee Benefits
16
Building the case for benefits
Benefits program best practices:
Retirement Best Practices
BEST PRACTICE:
EMERGING BEST PRACTICE:
• Monitor whether employees are
•
Contact employees individually
regarding diversification
•
Phased retirement
•
Roth 401(k)
• Make participation easy with
•
Replacement ratio as measure of
success
• Give employees an incentive to
•
One-on-one education
•
Matching catch-up contributions
diversifying
• Offer investment choices – but
not too many
“auto” features
increase contributions (Offer a
match, etc.)
• Offer lifecycle/lifestyle funds
• Leverage plan metrics
17 Source:
The Principal 10 Best Companies for Employee Financial Security
Building the case for benefits
Basics of a great program:
Risk Protection Best Practices
BEST PRACTICES:
EMERGING BEST PRACTICE:
•
Offer protection for catastrophic
losses first
•
Benefit designs that encourage
personal responsibility
•
Close benefit gaps with buy-up
options or voluntary offerings
•
One-on-one, benefit education
•
•
Targeted communications
Design benefits to encourage
appropriate utilization
•
Simple financial planning tools
•
•
Payroll deduction
•
Benefit workshops
Mandatory enrollment meetings
•
Benefit event triggered education
•
Ongoing access to financial
guidance resources
•
Include spouses in education effort
18 Source:
The Principal 10 Best Companies for Employee Financial Security
Building the case for benefits
Benefits program best practices:
Health & Wellness Best Practices
BEST PRACTICE:
EMERGING BEST PRACTICE:
• Focus on wellness
• Offer free health screenings
• Establish baseline measures
•
– HSA & HRA
– Front-load HSA/HRA
contributions
(claims, costs, etc.)
• Pay for preventive care
• Disease management
• Tie wellness participation to
– Co-insurance vs. co-pay
– Cost transparency
– Financial responsibility
insurance premiums
– Programs to measure and
evaluate doctors
• Offer choice to meet employees’
varying needs
19
Engagement models of
healthcare
•
Include spouses in wellness
screenings
Source: The Principal 10 Best Companies for Employee Financial Security
Maximizing your benefits
investment
Articulate the facts:
Communicate True Value
Employees underestimate the true value
of their benefits by
43%
Source:
20 HR Daily Advisor, June 2007
Maximizing your benefits
investment
Articulate the facts:
Employees are more satisfied with benefits
when they understand their value
21


Good benefits + poor
communication =
Good benefits + good
communication =
17%
8%
turnover
Source: Watson Wyatt 2007 through HERO Think Tank
turnover
Maximizing your benefits
investment
Educate.Educate.Educate:
Communication Best Practices
BEST PRACTICE:
• “Age” education with
workforce
• Distribute personalized
benefit statements
• Use a combination of tools:
email, newsletters, video,
web, paycheck stuffers
EMERGING BEST PRACTICE:
• Personalization - Text
messages
• Total compensation statement –
use as retention tool
• Include spouses
• Educate on misused or
underused benefits
• Share what you’re up against
• One-on-one education
• Use simple language
Year round Endeavor!
22
Source: The Principal 10 Best Companies for Employee Financial Security
Maximizing your benefits
investment
Educate. Educate. Educate:
Individual education increasing in popularity
73% of workers use written
materials from work;
however, workers find
financial professionals
to be the MOST USEFUL
information source.
- 2007 EBRI Retirement Confidence Survey
23
Maximizing your benefits
investment
Employees have to figure out financial
security for themselves
Help…I need somebody!
24
The Power of One-on-One Education
Employees are Struggling
•
92% of employees say financial worries are keeping them up at night.*
•
86% of employers are concerned about the level of stress among their
employees.*
•
Employees are more likely to give their CAR an annual checkup than
their financial situation:**
Percentage of employees
who have done this in the past year:
* ComPsych
**2nd
25
Car check-up
95%
Health check-up
72%
Financial check-up
28%
survey as noted in “Finances running low, stress running high” -- Employee Benefit News (01/09)
Quarter 2008 Principal Well-Being Index
Trends in Employee Benefit Programs
26
Health Care Reform
David McNichols
Vice President – Insured Medical
Health Care Reform Implementation
• Staggered effective dates through 2018
• The reforms do not appear to apply to:
• HIPAA-excepted benefits (such as
stand-alone dental, vision, Health
FSA)
• Stand alone retiree plans
• Sanctions for non-compliance are the same
as for violating HIPAA portability
28
Quick Reference Timeline
Patient Protection and Affordable Care Act
2010
2011
2012
•
Retiree reinsurance program
•
Patient protections (emergency & choice of
provider to OB & GYN)
•
Small business tax credit
•
Temporary high–risk pool for uninsured
•
No pre-existing condition exclusion for
enrollees under 19
•
DOL to require MEWAs to register with the DOL
•
Rescissions are prohibited,
•
No lifetime dollar limits on essential benefits
•
First dollar coverage for preventive care
•
Restricted annual limits on essential benefits
•
Revised appeals process
•
Extension of coverage for adults until age 26
•
Non-discrimination rules extended to insured
•
Web portal
•
FSA/HRA/HSA/MSA: over-the-counter medications
reimbursable only with prescription
•
Employer W-2 reporting on 2011 coverage
•
Long-term care program
•
Higher penalty for Health Savings Account withdrawals for nonqualified expenses
•
Medical loss ratio requirements for insurers (85% for large
groups and 80% for individual and small groups)
•
Standardized information disclosure (with notice of
modifications 60 days in advance)
•
Comparative effectiveness research fee paid by insurers and
self-insured plans, beginning plan year ending after September
30, 2012 ($2 per covered life; $1 in first year)
• 4-page pre-enrollment coverage document sent –
outlining benefits and exclusions.
29
Quick Reference Timeline
Patient Protection and Affordable Care Act
2013
2014
2015
2018
TBD
•
Plans to certify compliance with certain Health
Insurance Portability and Accountability Act
(HIPAA) Electronic Data Interchange (EDI)
standards
•
FSA member contribution capped at $2500
•
Employer notice to employees about the Health
insurance exchange
•
Health plans lose tax deduction for Medicare Part D
drug subsidy reimbursements
•
No waiting periods longer than 90 days
•
No annual dollar limits on essential benefits
•
Employer pay or play (free rider) penalty
•
Free-choice voucher
•
Wellness program rules
•
Plans to certify compliance with other HIPAA EDI standards
•
“Cadillac Tax” on high-cost health plans
•
Automatic enrollment by large employers (200 or more full-time employees)
•
Employers reporting to IRS on plan features (and
provide value information on W-2 statements to
employees by January 31, 2015)
•
Health Insurance Exchange
•
Clinical trials
•
No preexisting condition exclusions
30
Some Immediate Health Care Reforms
(First plan year on or after 9/23/2010)
• No pre-existing condition limits for enrollees under
age 19
• Non-discrimination rules extended to insured
designs
• No rescissions except for fraud
• Preventive care services with no in-network
member cost sharing
• Emergency services and patient protection
• And more
31
Special enrollment periods
• Participants must be notified of special 30-day
enrollment periods
• Expands coverage for adult children
• Individuals may be able to re-enroll even if their
coverage ended or they were denied coverage
(or were not eligible for coverage) because:
– Dependent coverage of children ended before
attainment of age 26
– They reached lifetime maximums, which no longer
apply
32
What’s on the horizon?
Some examples include:
• Jan. 1, 2011
– FSAs, HRAs, or HSAs will not be able
to reimburse over-the-counter (OTC)
drugs and medicines unless they are
prescribed by a doctor.
– W-2 reporting: Employers must
calculate and report value of applicable
employer-sponsored coverage
33
Worth noting: Small employer tax credit
Employers with less than 25 “full-time equivalent” employees and
annual average wages below $50,000
– Employers must contribute at least 50% of the cost
– The credit amount begins to phase out if more than 10
employees and/or more than $25,000 in average wages
– Credit amount is 35% through 2013; 50% thereafter
• Prior to 2014: Only applies to fully insured health coverage
(but can include dental and vision)
• Beginning 2014: Only applies to coverage offered through the
exchange
34
Impacts will vary by employer
• Some provisions impact all employers
• Fully insured vs. self-funded
• Number of employees
• Bottom line: It’s important to evaluate your
medical coverage
35
This summary is an overview of the impact of Health Care Reform
from Principal Life. It is not a complete statement of the impacts
or changes that may result from federal Health care reform.
State mandates may result in additional benefits not described
here.
Copyright:
© 2010 Principal Financial Services, Inc.
GP59324 09/2010
37
Encouraging
People
38
For financial professional use only. Not for use with the public in sales situations.
To get rebuilding
See an advisor
And make a plan
We’re Making it Interactive…
Planning Center
Mobile Application
America Rebuilds Planning Center Website
For financial professional use only. Not for use with the public in sales situations. 39
Join with The Principal®
to help America rebuild.
For financial professional use only. Not for use with the public in sales situations.
40