ARLINGTON, Va., Feb. 19, 2020 (GLOBE NEWSWIRE) — Roughly half of public sector workers surveyed (46%) are worried that the health care benefits they were promised in retirement will evaporate when they need them most. This is according to the 2020 Keeping Benefit Promises Study by Willis Towers Watson (NASDAQ: WLTW), a leading global advisory, broking and solutions company. Public sector workers also expressed the importance of retiree health care coverage, with 58% saying it was extremely or highly influential in their decision to work in the public sector.
Many public sector workers acknowledged they likely earn less in base pay and bonuses than their private sector counterparts but expect their employers to make up this difference by offering robust benefits in retirement. “What public sector workers give up in salary, they make up in benefits,” said Jon Andrews, managing director, Benefits Delivery and Administration, Willis Towers Watson. “As costs climb and budgets are cut, public sector retiree health care benefits are increasingly at risk of disappearing. But slashing these benefits could have a catastrophic effect on our communities’ ability to attract top talent to teach our children and keep our towns safe.”Almost two-thirds (64%) of public sector workers said their financial security in retirement depends on the promise of employer-sponsored health care coverage. However, retiree health care is becoming an unsustainable financial burden on public sector organizations, with state unfunded retiree health care liabilities nationwide reaching $700 billion.ⁱ Many cities are reacting by cutting retiree health care altogether or adopting short-term solutions, such as reducing spousal benefits or requiring more years of service to qualify.“When balancing their budgets, public sector organizations are stuck between a rock and a hard place,” said Andrews. “They do not want to increase taxpayer burden nor deprive employees of the benefits that initially attracted them to the job. The good news is a solution exists. Employers should consider an often-overlooked remedy: providing funding via a health reimbursement arrangement and allowing retirees to shop for health plans (with these funds) on the individual Medicare marketplace.”Notably, 41% of public sector workers said they would give notice if their benefits were reduced, and more than half (54%) expect to be supported in retirement because they served their community. “Public sector workers are the strongest thread in the fabric of our communities. We need to honor the benefits they were promised in retirement, especially when there’s a viable, cost-saving solution,” said Andrews.About the individual Medicare marketplaceWith retiree health coverage being reduced across the country, there is hope in an overlooked solution: The individual Medicare marketplace — or Medicare exchange — is a marketplace that provides affordable plan options for retirees through a defined contribution model while making retiree health care sustainable for plan sponsors.Willis Towers Watson runs an individual Medicare marketplace for Medicare-eligible retirees (65 or older). Retirees get one-on-one concierge service to make informed plan decisions and save money because plans found on the Marketplace are often less expensive.About the surveyThe Willis Towers Watson 2020 Keeping Benefit Promises Study was conducted online from November 6 through November 13, 2019. A total of 1,522 public sector employees and retirees participated.About Willis Towers WatsonWillis Towers Watson (NASDAQ: WLTW) is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. With roots dating to 1828, Willis Towers Watson has 45,000 employees serving more than 140 countries. We design and deliver solutions that manage risk, optimize benefits, cultivate talent and expand the power of capital to protect and strengthen institutions and individuals. Our unique perspective allows us to see the critical intersections between talent, assets and ideas — the dynamic formula that drives business performance. Together, we unlock potential. Learn more at willistowerswatson.com.Media contactJulia Mellon: +1 212 584 5474
[email protected]ⁱ Liz Farmer, “As Retiree Health-Care Costs Soar, Public Employers Turn to Private Insurers,” Governing, January 9, 2019, https://www.governing.com/topics/finance/gov-retiree-health-care-costs-soar-government-solutions.html
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