Insights from the Benefits Trends Survey 2023
Every other year WTW conducts a global survey addressing benefits trends among employers (Benefits Trends Survey) and employees (Benefits Attitudes Survey). For Switzerland the most recent Benefits Trends Survey contains important insights regarding Swiss pension plans. 85 participating Swiss employers were from different industries and size groups with a majority being small and medium size employers – a good representation of the overall Swiss economy.
Some key data points have been identified. A significant finding is that employers tend to underestimate the importance of their pension plan on employee satisfaction: Whereas from an employer perspective topics like flexible work arrangements, career opportunities or inclusion and diversity are perceived to be key benefits, employees put a greater focus on pension plans and long-term financial wellbeing. That discrepancy in perception is fundamental and bears a significant risk for Swiss employers to invest money in areas which may not be appreciated to their full extent by employees.
At WTW, we regularly observe in design and M&A projects how important Swiss pension plans are for employees. Hence, it’s great to see that all employers surveyed wish to have their pension plans be at market or above market in the next years (with around half wanting to be above market). This compares to the current situation where 72% are at market or below. The survey data almost seems to imply an upwards spiral for Swiss pension plans. Nonetheless, given that many employers also stated in the survey that they are highly concerned about rising benefit costs, we will most likely see the same total capital resources being allocated in a more effective manner and/or risk management activities to ensure costs are sustainable. This view is supported by the fact that 41% of Swiss employers have already taken actions to mitigate pension plan risk or are considering such actions. Moreover, employers are evaluating the vendor marketplace to reduce costs and increase management efficiencies (about 80%) in the delivery of their benefits to employees.
In addition, given that ESG considerations are increasingly a central consideration for employers and employees it’s no surprise that 32% of employers are considering specific actions to incorporate ESG in pension plan investments, although for now, only 13% of participating Swiss employers have taken definite actions towards that goal.
Swiss pensions are for many employers the most expensive benefit reward in their benefits portfolio, apart from compensation. Better marketing and communication to employees can certainly help to better promote this value. Looking at benefits and pension plans, most Swiss employers look at a more targeted communication (49%) and are focusing on digital communication channels (62%). In practice we often see pension funds and their administrators being rather technical and formal in their communication style. This leaves room for employers to inform employees in more engaging ways like videos, cartoons, infographics, microsites about their pension plan and risk benefits.
Meanwhile, Swiss employers continue to face significant talent challenges: with 82% mentioning that attraction and retention of key talent is a big topic, and 70% being concerned about the overall employee wellbeing it is fair to conclude that Swiss pension plans should continue to remain a key priority for Swiss employers and their employees.
WTW’s Pension Index decreased by 0.5% during Q3/2023.
