Extended absences put small, mid-size companies at risk

Source: https://eba.benefitnews.com
By Tristan Lejeune

Disability insurance experts with the Guardian Life Insurance Company are in the final stages of developing an index for measuring and predicting the success of companies’ absence management programs in conjunction with their short-term and long-term disability. Guardian’s Andrew Hutchison, assistant vice president of group life and disability products, and Judy Buczek, manager of group disability products, are taking the opportunity to encourage small and mid-size employers who haven’t yet implemented absence management to do so.

“Absence management is not new, but it’s really kind of a large-case concept," Buczek says. "Larger employers understand the importance of managing absenteeism, but it’s just as important for mid-size and smaller employers. And actually, they’re usually the folks who don’t have access to the type of tools they need to manage a program. ... We're trying to help employers recognize the need for absence management programs, and also to help bring some of those programs downstream to the smaller employers."

Hutchison recommends that every company explore their absence management options, especially those without enough human resources personnel to dedicate exclusively to the cause. “To outsource” a coordinated, umbrella approach to reining in absenteeism and long-term disability, he says, may seem like a big expense, but it “really becomes a cost-saving measure, and it takes away a lot of the worry.” Small companies, he says, are particularly vulnerable to extended absences.

“These days, everyone is asked to do two jobs,” Hutchison says. “So having a person out, really, really has an impact on the organization today. Getting people back to work sooner … really does impact the bottom line.”

To that end, Buczek says, Guardian is planning a spring release for its Absence Management Activity Index Report and Tool.

“It’s an employer tool that they can use to find out the effectiveness of what they have in place,” she says. “We’ve done some research on our existing plan holders, both large and small, and we’ve looked at what type of programs they have in place, from wellness to a seamless FMLA program to an STD/LTD program and we said, ‘OK, what programs work the best and what are most effective at managing absences?’ It’s geared toward making sure that the appropriate tools are put in place.”

by 6d-destani

Tax the rich – and limit retirement contributions? It doesn’t add up

Source: https://eba.benefitnews.com
By: Aaron Friedman

Tax the rich! Raise their rates! Limit their deductions! That seems to be the populist mantra. It’s perpetuated in the press, and there’s some indication that the general public seems to support the idea. Now middle class workers with higher than average incomes seem to be caught up in discussions defining those that are “rich.”

As this applies to tax-exempt organizations, we’re talking about hospital administrators, educators, executive directors of local community and other charitable organizations – people who generally earn a better than average income, yet by no stretch of the imagination do their incomes compare to Warren Buffett’s. And when it comes to the impact on their employers’ retirement plans, shouldn’t the tax structure support retirement readiness for those who have dedicated their careers to giving back to their communities?

For example, current conventional belief supports that people should be saving 11-15% of their pay, including matching contributions, every year throughout their working careers in order to save enough to be retirement ready. Assuming a 3% match, and therefore an average of a 12% annual savings need, anyone earning less than approximately $146,000 annually should be fine. (12% of $146,000 is approximately the $17,500 annual limit.)

However, what about the person making $250,000 per year? Contributing a maximum of $17,500 only equates to 7% of pay. When the match is included it’s still short of the target necessary for retirement readiness — yet as the numbers show, these limitations currently in place put these people at a disadvantage for retirement savings. In addition, one of the alternatives under consideration is limiting qualified plan contributions even further.

Fortunately, there is something that can be done. Private (non-governmental) tax-exempt organizations can maintain a deferred compensation plan under section 457 of the internal revenue code. These 457 plans allow for additional benefits for a select group of management or highly compensated individuals, over and above the limitations in their 403(b) or 401(k) plan.

457 plans are an excellent tool for tax-exempt organizations to be able to recruit, retain, reward and retire key personnel. In other words, they help meet the goals of the organization (which in turn, serves their communities) while empowering key employees to meet their financial goals.

Last summer, Sen. Tom Harkin released a report called “The Retirement Crisis and a Plan to Solve It.” One premise of the report is that there is inadequate savings for Baby Boomers and Gen Xers to pay for basic expenses in retirement. The report footnotes studies that show this ”retirement income gap” is between $4.3 and $6.6 trillion, but as we see above, there is already pressure in regular tax rules that make it difficult for higher-than-average income people to achieve retirement readiness.

As Congress continues the tax debate, it’s important that we consider what’s good for the long term, and helping all plan participants achieve retirement readiness should be of paramount importance. Tax reform and retirement policy should not be at odds.

by 6d-destani