Study of Employee Benefits: 2 0 0 9 & B E Y O N D: The Prudential Insurance Company of America 0160082-00002-00

PRUDENTIAL’S GROUP INSURANCE
STUDY OF
EMPLOYEE BENEFITS:
2009 & BEYOND
The Prudential Insurance Company of America

0160082-00002-00
Study of Employee Benefits: 2009 & Beyond
Table of Contents
Welcome 1
Study Overview 2
Methodology 3
Key Themes 7
A New Day in Employee Benefits — Plan Sponsors Change Priorities 8
Back to Basics — Workers Shift Focus to Short-Term Financial Goals 20
Expertise Is Essential —Turbulent Times Call for Expert Advice 28
Show Them the Value — What Is Said Is as Important as How It’s Said 42
Long-Term Care Insurance — A Pillar of Retirement Planning 54
Summary of Key Findings 67
About Prudential 73
Welcome
We are pleased to introduce our latest research report, the Study of Employee Benefits:
2009 & Beyond. This is the fourth consecutive year we have conducted this research
and, as in previous years, we are sharing this valuable information to help you develop
effective benefits strategies today, while keeping an eye toward the future.
Not surprisingly, this year’s trends have been shaped primarily by the recent economic
downturn that has impacted so many industries worldwide. The same plan sponsors
who were on track to increase benefits budgets and staff just last year are now either
maintaining the status quo or making cuts. Meanwhile, plan participants who once
made obtaining the right insurance a priority are now focused more on job security
and simply making ends meet. Nevertheless, job seekers continue to consider the
overall value of a company’s benefits package when making career decisions.
It’s because of these and other challenges that plan sponsors may increasingly rely on
the knowledge and expertise of the benefits brokerage/consulting community, whose
perspectives have been included in this report for the first time. We believe that adding
their voices to those of plan sponsors and plan participants offers broader and deeper
insights into the trends that will shape the benefits industry over the next five years.
Plan sponsors may need help from brokers/consultants to develop effective communications,
as our research reveals that benefits communications can have as much impact on
employees’ satisfaction with their coverage as the range of benefits offered or the
perceived dollar amount of employer contributions. This is a powerful finding of
which all industry stakeholders should take note.
The group insurance industry does not exist in a vacuum. The economy, national
events, and popular opinion all influence plan sponsors’ and plan participants’
perceptions of benefits. We will continue to remind employers and employees of
the importance of benefits; provide them with the innovative products they need;
and give them the education, support, and guidance to make the best decisions
for their businesses, themselves, and their families.
We hope this research gives you new insight into the benefits landscape and proves
to be a useful tool as you plan your benefits strategies.
Sincerely,
Lori High
President, Prudential’s Group Insurance
1
Study Overview
Navigating the landscape of employee benefits has been as challenging as ever in 2009.
Like most sectors of the U.S. economy, the benefits industry is feeling the effects of
the current financial crisis, which is likely to significantly impact how corporations think
about and deliver employee benefits in the future. Meanwhile, the average U.S. worker’s
finances are being stressed in the wake of the recession, which in turn impacts how
he or she views workplace benefits.
Given the extraordinary challenges and the potential changes facing the industry,
the need for sound benefits strategy and planning has never been greater. Benefits
professionals are playing an increasingly important role as plan sponsors seek expert
advice and guidance on maintaining the competitiveness of their benefits programs
while managing costs effectively.
The Study of Employee Benefits: 2009 & Beyond looks at these and other trends
that will continue to shape the employee benefits landscape over the next five years.
Research Objectives
For the fourth consecutive year, The Prudential Insurance Company of America has
surveyed a representative cross section of benefits plan sponsors and benefits plan
participants across the United States. In addition, for the first time, Prudential invited
nearly 600 employee benefits brokers and consultants to participate in our study
to help provide a clearer picture of the current and potential future state of the
group insurance industry. The results of our research are compiled here in the
Study of Employee Benefits: 2009 & Beyond.
This year’s study addressed many of the emerging issues and trends facing employers, their
employees, and group insurance intermediaries with respect to workplace benefits, including:
The impact of recent economic conditions on companies, individuals, and group
employee benefits brokers/consultants
Ways employers plan to manage benefits costs while maintaining a competitive package
The effectiveness of benefits education and communication
The role and use of employee benefits brokers/consultants
The perception of long-term care needs and insurance coverage among employers
and employees
Five Key Themes From This Research

1. A New Day in Employee Benefits — Plan Sponsors Change Priorities
2. Back to Basics — Workers Shift Focus to Short-Term Financial Goals
3. Expertise Is Essential — Turbulent Times Call for Expert Advice
4. Show Them the Value — What Is Said Is as Important as How It’s Said
5. Long-Term Care Insurance — A Pillar of Retirement Planning
2
Methodology
The Study of Employee Benefits: 2009 & Beyond was conducted via the Internet
during April and May of 2009 and consists of three distinct surveys: one among benefits
plan sponsors; one among benefits plan participants; and one among group insurance
benefits brokers/consultants. This allowed us to compare and contrast opinions of
employers, employees, and brokers/consultants on key benefits issues. All three surveys
were conducted simultaneously.
This year’s study was conducted for Prudential by the Center for Strategy Research, Inc.,
a Boston-based, independent, market research firm.
Overview of Plan Sponsor Survey

Plan sponsor results are based on a national survey of 1,207 employee benefits
decision-makers. Respondents include business executives, business owners, human
resources professionals, and financial management professionals. The survey sample
covers all industries, including government, and is nationally representative of all
U.S. businesses with at least 50 full-time, benefits-eligible employees.
Data shown in this report are weighted to a base of 1,200 and reflect the actual proportion
of U.S. businesses by company size, industry, and region, based on data from the
U.S. Census Bureau. The margin of error is +/- 3.0% at the 95% confidence level.
Below is a breakdown of survey respondents by survey participant region, job function,

industry, approximate 2008 sales, years in business, and business ownership.
Region Job Function Industry
9%
21% Other
16% 28% 31%
West Services
34% Accounting/ 42% Other
South Finance/Treasury Executive/Owner
21%
Northeast 6%
33% Wholesale
24% HR/Employee 10%
Midwest Benefits 6% Retail
Manufacturing 11%
8% Construction
Health Care
2008 Sales or Fee Income Years in Business Business Ownership
Under $10 million 17% Fewer than 10 13% Private 79%

$10 million to 10–19 16% Public 19%
under $25 million 22% 20–49 41% Don’t know 2%
$25 million to 50 or more 29%
under $50 million 13%
Don’t know 1%
$50 million to
under $200 million 14% Mean 42 Years
$200 million to Median 35 Years
under $500 million 6%
$500 million to under $1 billion 6%
$1 billion or more 6%
Don’t know 16%
3
Methodology
Overview of Plan Participant Survey

Plan participant results are based on surveys conducted among 1,212 employees, age
22 or older, who work full time for a company with at least 50 employees. The survey
of employees was conducted during the same time period as the employer surveys.
The survey sample is nationally representative of all U.S. workers at companies with at
least 50 full-time employees. Data shown in this report are weighted to a base of 1,200
and reflect the actual proportion of U.S. workers by gender, region, race and ethnicity,
education level, household income, and age, based on data from the U.S. Bureau of
Labor Statistics and the U.S. Census Bureau. The margin of error is +/- 3.0% at the
95% confidence level.
Below is a breakdown of survey respondents by age, region, household income, gender,

racial and ethnic background, education level, as well as employer industry and size.
Age Region Household Income
6% 8%
60+ 20% $150,000+
19%
22–29 Northeast 13% 35%
35% $100,000– Under
22% South $149,000 $50,000
50–59
23% 17%
28% West $75,000–
30–39
24% $99,000 27%
40–49 23%
Midwest $50,000–
$74,000
Gender Education Employer Size

(by number of employees)
Male 54% Some High School 9%
Female 46% High School Graduate 29% 50–99 10%
Some College 100–499 22%
or Technical School 29% 500–999 9%
Racial Background
College or Technical 1,000–2,499 13%
Caucasian 81% School Graduate 23% 2,500–4,999 8%
African-American 13% Post-Graduate School 10% 5,000–9,999 8%
Asian 4% 10,000–24,999 8%
Other 2% Employer Industry 25,000 or more 22%
Manufacturing 12%
Ethnic Background Financial 10%
Hispanic 15% Retail Trade 10%
Non-Hispanic 85% Health Care 9%
Public Administration 8%
Professional Services 8%
Information 6%
Education 6%
Construction 5%
Other 26%
4
Overview of Broker/Consultant Survey
Broker/consultant results are based on surveys conducted among 573 group insurance
brokers/consultants who work full time for a company with at least 50 employees.
The survey of group insurance brokers/consultants was conducted during the same
time period as the employer and employee surveys. The margin of error is +/- 4.0%
at the 95% confidence level.
Participants include brokers/consultants who meet the following qualifications:

At least 25% of their total “book of business” comes from group employee benefits
They sell or service group insurance products such as life, disability, dental,
long-term care, and vision
No more than 25% of their business comes from clients with fewer than 50 employees
We categorized participants based on the size of clients they predominantly serve:

Small-Market Brokers/Consultants — Sixty percent or more of their business comes
from clients with fewer than 100 employees. Thirty-one percent of the sample falls
in this group. On average, 70% of their clients have fewer than 100 employees.
Mid-Market Brokers/Consultants — The majority of their business comes from
clients with 100 to 999 employees. Thirty-seven percent of the sample falls in this
group. On average, 63% of their clients have between 100 and 999 employees.
Large-Market Brokers/Consultants — Thirty percent or more of their business
comes from clients with 1,000 or more employees. Thirty-two percent of the sample
falls in this group. On average, 58% of their clients have 1,000 or more employees.
Below is a breakdown of survey respondents by region, years in the business, age,

gender, size of firm, and types of clients served by industry and size.
Region Years in Business
<0.5%
1 to Less Than
2 Years
26% 25%
Northeast South 26%
47% 2 to 5 Years
More than
10 Years
19%
West 30% 27%
Midwest 6 to 10 Years
Age Gender
Under 25 1% Male 46%

25–34 27% Female 54%
35–44 36%
45–54 24%
55–64 12%
65+ 0.50% 5
Methodology
SIZE OF BROKER/CONSULTANT FIRMS BY NUMBER OF EMPLOYEES

37%
28%
18%
16%
<500 500–4,999 5,000–9,999 10,000+
Top Employer Industries
Manufacturing 41%
Finance/Insurance 33%
Health Care and Social Assistance 30%
Management of Companies and Enterprises 27%
Educational Services 27%
Public Administration/Government 20%
Construction 15%
Retail Trade 14%
Administrative/Support/Waste Management/Remediation Services 12%
Accommodation and Food Services 11%
Transportation and Warehousing 10%
Other Services (except Public Administration) 10%
Note: Benefits brokers/consultants were asked to indicate the three industries

in which they have the highest concentration of clients. Numbers will add up
to more than 100%.
Average Size of Clients Served
Small Market —Employers with fewer than 100 employees

Mid Market —Employers with 100 to 999 employees
32% Large Market —Employers with 1,000 or more employees

37% Large Market
Mid Market
31%
Small Market
6
Key Themes
This report examines some of the most

pressing issues facing the benefits industry
and projects how those trends will evolve
over the next five years based on insights
from plan sponsors, plan participants, and
group insurance intermediaries. Following
are the key themes that emerged from
the research.
7
A New Day in Employee Benefits —
Plan Sponsors Change Priorities:
Surviving During the Economic Downturn
Is Now Employers’ Main Concern
Leading Economic Indicators Drive Significant Changes to the Way

Organizations Conduct Day-to-Day Business, as Well as How They
Manage Benefits
Large and small businesses alike have felt the impact of the recent economic downturn.
Many companies have initiated hiring freezes, laid off a portion of their work force,
and/or made changes to wages and benefits to help recover from this difficult period.
Most plan sponsors (68%) say that their companies have been negatively affected
by current economic conditions. About one in five report that the economy has had
a “neutral” effect, and 13% say the current economic conditions have positively
affected their business.
■ The longer a firm has been in business, the more likely it is to say that the
economy has had a very negative impact on its business.
■ Companies in the manufacturing and construction industries are more likely than
others to say that the economy has had a very negative impact on their business.
■ Multinational firms are more likely than others to say that the economy has had
a positive impact on their business.
Brokers and consultants have felt the sting of the recession as well, but may have
weathered the conditions a little better than their clients. Just over half (53%) say
their business has been negatively affected by the recent economic conditions,
compared with 68% of plan sponsors, and more brokers/consultants than employers
say that the economy has had a positive impact on their business (27% vs.13%).
Brokers and consultants from smaller firms (<500 employees) and those focused on
serving the small market have felt the impact of the recession more so than those
working in larger firms and serving the mid to large markets (500+ employees).
IMPACT OF RECENT ECONOMIC CONDITIONS ON BUSINESS

PERCENTAGE OF BROKERS/CONSULTANTS AND PLAN SPONSORS
Very Negative Somewhat Negative Neutral Positive
Plan Sponsors 29% 39% 19% 13%
Brokers/Consultants 12% 41% 20% 27%
8
Area of significant difference
More Plan Sponsors Report Declining or Flat Benefits Budgets in 2009
The growth of the past few years is reflected in the percentage of plan sponsors
who expected their benefits budgets to continue expanding as recently as last year.
For example, as reported in Prudential’s Study of Employee Benefits: 2008 & Beyond,
63% of plan sponsors said their benefits budgets increased from 2007, and nearly
90% expected continued increases by 2013.
This year, less than half (46%) of plan sponsors say their benefits budgets increased
from 2008 — a sharp drop from 2007 and 2006. About one-third of companies are
maintaining their 2008 budget levels, while some (15%) say their budgets have
decreased since last year (down an average of 16%).
Companies most negatively impacted by recent economic conditions are more likely
to have experienced budget cuts from 2008 — 26% had their budgets reduced in
2009, compared with 15% of plan sponsors, on average.
Brokers and consultants also see the impact of the economy on their clients. About
three-quarters (74%) report that recent economic conditions have negatively affected
their clients’ benefits budgets.
■ Those serving the small market are more likely to say their clients’ budgets have
been negatively affected.
■ Brokers and consultants who say their firms have been positively affected by the
economy are more likely to say their clients’ benefits budgets have increased.
CHANGE IN BENEFITS BUDGET PER EMPLOYEE

PERCENTAGE OF PLAN SPONSORS
Budget 2008 Actual 2009 Actual

Increase 63% 46%
Decrease 7% 15%
Remain the same 29% 37%
Don’t know 1% 2%
9
These findings are in line with economic statistics reported by the media.
Companies are looking for ways to reduce costs, and employee benefits are
not immune to those efforts.
IMPACT OF RECENT ECONOMIC CONDITIONS ON CLIENTS’ EMPLOYEE BENEFITS BUDGETS

PERCENTAGE OF BROKERS/CONSULTANTS BY MARKET SEGMENT
Impact Total Small Market Mid Market Large Market

Positive 17% 7% 17% 25%
Neutral 8% 9% 9% 7%
Somewhat negative 35% 34% 36% 34%
Very negative 39% 50% 37% 32%
Don’t know 1% 0% 1% 2%
10
Large Firms and Those Most Affected by the Economy Have Been Forced
to Alter Their Expectations Regarding Benefits Staffing Levels
It is no longer fair to assume that most companies will follow traditional business
growth patterns and subsequent hiring campaigns that require larger human resources
and employee benefits staff. More than half of plan sponsors surveyed (56%) plan
to maintain the size of their employee benefits staff over the next five years. About
one-third plan to increase the size of their staff, and about 6% plan to decrease.
Not surprisingly, those affected most negatively by the recession are more likely to
forecast downsizing of their benefits staff over the next five years. Those who believe
that the current economy has positively affected their company are much more likely
to anticipate adding staff by 2014.
IMPACT OF RECENT ECONOMIC CONDITIONS ON PROJECTED BENEFITS DEPARTMENT STAFFING

Impact of Economy
Projected Change in Staffing by 2014 Positive Neutral Negative
Increase staff size 47% 30% 30%
Stay the same 42% 64% 57%
Decrease staff size 2% 3% 8%
Don’t know 7% 3% 5%
11
Larger companies, which also tend to have larger human resources departments,
are more likely to report decreasing their staffs over the next five years, compared
with smaller companies. This is quite different from what larger plan sponsors expected
in 2007. For example, as reported in Prudential’s Study of Employee Benefits:
2007 & Beyond, 46% of large companies (10,000+ employees) expected to
increase their human resources staff over the next five years, compared with
just 29% of large employers this year.
EMPLOYEE BENEFITS STAFFING PROJECTIONS FOR 2014

Don’t Know
5% 4% 4% 2% 8% 9% 4%
Decrease 3% 6% 8% 23%
6% 65%
53% 54% 8% 16%
56%
56%
Same
51%
Increase 44% 44%
37% 36%
33% 33% 31%
28% 29%
Total 50–99 100–499 500–999 1,000–4,999 5,000–9,999 10,000+
2008 Benefits Staff Size (Mean): 6.7 3.3 4.9 7.7 12.5 21.3 31.4
12
Cost-Containment Efforts Are Now More Urgent, While Strategic
Initiatives Are Becoming a Lower Priority
Cost-cutting initiatives were important to plan sponsors prior to this year. But the
focus on reducing benefits costs and improving efficiency is clearly a mandate and
central to the overall business strategy at many firms.
Cost-containment strategies are expected to be the most critical over the next five
years. Nearly three in five plan sponsors say “using Internet technology to reduce
costs/increase efficiency” and/or “attempting to control benefits costs by addressing
workforce health” will be highly important objectives by 2014. Not only are these
identified as the top objectives by 2014, but their importance is expected to increase
more than all other objectives over the five-year period (27 and 23 percentage
points, respectively).
Strategic initiatives that were the focus in the past few years are now taking
a backseat to cost-cutting measures. In 2007, “increasing employee education
and advice” was the top-rated benefits objective. This year, it is tied for the most
important objective and by 2014 it drops to third on the list.
IMPORTANCE OF EMPLOYEE BENEFITS OBJECTIVES

PERCENTAGE OF PLAN SPONSORS RATING ITEM “HIGHLY IMPORTANT”
2009 Projection Change

Benefits Objectives 2007 2009 for 2014 2009–2014
Applying/using Internet technology to reduce
benefits costs or to increase efficiency 27% 32% 59% +27
Attempting to control benefits costs by
addressing workforce health by promoting
wellness, prevention, and work/life balance 32% 34% 57% +23
Increasing employee education/advice to help
employees make the best benefits choices 34% 34% 51% +17
Giving more financial responsibility to
employees through high-deductible health
plans, health savings accounts (HSAs), etc. 21% 24% 44% +20
Cost-sharing—asking employees to bear
a greater portion of the costs of benefits 19% 25% 42% +17
Tailoring communication and enrollment to
meet the needs of various employee segments 26% 25% 38% +13
13
Two years ago, 22% of plan sponsors said that their employee benefits strategy was
closely linked to their financial and business goals. Yet, 41% expected the two to be
closely linked by the year 2012. This year, still only 21% of plan sponsors say their
employee benefits strategy is closely linked to their financial and business strategies —
representing no increase over the past two years. And this year, fewer plan sponsors
(34%) expect the two to be linked in the next five years.
LINKAGE OF BENEFITS STRATEGY AND BUSINESS/FINANCIAL GOALS

PERCENTAGE SAYING “CLOSELY LINKED”
41%
34%
22% 21%
2007 2007 Projection 2009 2007 Projection

for 2012 for 2014
14
Plan Sponsors Are Revisiting Their Overall Approach to Benefits, Which
May Reflect a Broader Shifting of Corporate Attitudes Toward Benefits
Some plan sponsors are turning to increased cost-sharing for more immediate savings,
while others are focused on a longer-term strategy of improving the health and
wellness of their work force.
The extent to which the recession has impacted employers seems to determine their
benefits priorities and cost-containment strategies, as shown in the chart below.
■ Plan sponsors that are most negatively affected by the economy place greater
importance on the short-term savings from increased cost-sharing, which is
their second-most important objective (compared with it being the fourth-
most important objective among all plan sponsors).
■ Those positively affected by the economic downturn have remained focused

on longer-term, but potentially higher-return, approaches to cost containment,
such as improving workforce health.
IMPORTANCE OF BENEFITS OBJECTIVES BY IMPACT OF ECONOMY

PERCENTAGE OF PLAN SPONSORS RATING EACH OBJECTIVE AS “HIGHLY IMPORTANT”
Impact of Economy on Companies

Benefits Objectives Positive Very Negative Difference
Attempting to control benefits costs by addressing workforce health
by promoting wellness, prevention, and work/life balance 47% 27% +20
Increasing employee education/advice—helping employees make
the best choices 39% 25% +14
Tailoring communication and enrollment to meet the needs of
various employee segments 28% 18% +10
Applying/using Internet technology to reduce benefits costs or to
increase efficiency 38% 31% +7
Giving more financial responsibility to employees through
high-deductible health plans, health savings accounts (HSAs), etc. 23% 27% -4
Cost-sharing—asking employees to bear a greater portion
of the costs of benefits 24% 30% -6
15
Use of Cost-Management Strategies Has Gradually Increased Since 2007
and Plays an Increasingly Important Role in Many Organizations’
Benefits Priorities
More and more companies have been deploying cost-cutting initiatives since 2007,
and the extent to which companies are involved in cost management has also
increased (with the exception of voluntary benefits). It is evident that plan sponsors
have identified cost-management strategies as effective approaches to combat
increasing benefits costs.
Interestingly, brokers and consultants will recommend all cost-management strategies

to their clients in five years’ time. Large companies (5,000+) and large-market brokers
and consultants are more likely than small employers and small-market brokers and
consultants to try various cost-management tactics.
16
USE OF COST-CONTAINMENT STRATEGIES
PERCENTAGE OF PLAN SPONSORS DOING EACH “TO AT LEAST SOME EXTENT”
2007–2009
2007 2008 2009 Change
Providing accommodations to assist
employees in returning to work following a
leave of absence, serious illness, or disability 18% 26% 25% +7
Sharing more of the cost of contributory
benefits with employees 16% 20% 22% +6
Implementing consumer-directed health plans 17% 21% 22% +5
Coordinating/integrating parts of medical,
pharmacy, disability, and workers’
compensation plans 15% 19% 21% +6
Providing a wider array of voluntary
benefits offerings (i.e., employees
pay 100% of the cost) 14% 13% 14% 0
Note: Ranked based on 2009 ratings.
17
A Majority of Plan Sponsors and Brokers/Consultants Have a Positive
Outlook for 2010
Six in ten plan sponsors surveyed (60%) expect their companies to be doing better
financially one year from now. Only 8% believe that they will be worse off than they
are today, while another 30% expect no change in their financial condition.
Despite being optimistic about their company’s ability to prosper after the recession,
most plan sponsors are less positive about the short-term prospects for their benefits
staffing levels and budgets. Apparently, companies see benefits cost management as
a longer-lasting reality and, perhaps, a necessary concession on the road to recovery.
■ Plan sponsors who are more optimistic about their companies’

financial prospects in 2010 are:
– Younger companies (in business fewer than 20 years)
– Private sector companies (vs. public entities)
– Multinational firms
– More paternalistic in their benefits culture
– Linking their benefits strategy to the company’s business
and financial goals to a greater extent
Interestingly, brokers and consultants are even more optimistic — seven in ten expect
that their firms will be doing better financially in 2010. Similar to their clients, only
8% believe that their firms will be worse off.
18
Those brokers and consultants who have fared well during this recession also anticipate
a strong financial year for their firm in 2010. Like plan sponsors, those with a more
strategic approach to employee benefits tend to have higher expectations for their
businesses next year.
■ Brokers and consultants who are more optimistic about their firms’
financial prospects in 2010:
– Help their clients link their benefits strategy to business/financial goals
– Provide a wider range of consulting and support services to their clients
– Currently sell long-term care insurance and expect interest in voluntary
benefits to increase in the next five years
PROJECTED FINANCIAL HEALTH OF THEIR BUSINESS IN 2010

PERCENTAGE OF PLAN SPONSORS AND BROKERS/CONSULTANTS
Much Better 8%
9%
52%
Better
60%
About the Same 30%

21%
Worse/Much Worse 8%
8%
Not Sure 2%
2%
Plan Sponsors
Brokers/Consultants
19
Back to Basics — Workers Shift Focus to
Short-Term Financial Goals: Protecting Income
and Assets in the Event of the Unexpected Is
of Greater Importance to U.S. Workers in 2009
The Recession Has Taken Its Toll on the Financial Security of U.S. Workers
With the highest unemployment rate in 25 years at 9.4% (as of May 2009) and
many thousands of layoffs since the beginning of the year,* working individuals
across the country are making significant changes to the way they manage their
day-to-day finances.
About three in five workers (57%) say they have been negatively affected by recent
economic conditions. Another 17% say they have been positively affected, and about
one-quarter say they have not been impacted either way.
■ Workers most negatively affected by the recession include:

– Men, especially those between ages 45 and 54, who have many competing
financial pressures
– Those who may be concerned about funding their children’s
college education
– Employees in the manufacturing, transportation, or warehousing industries,
especially in the midwest region
IMPACT OF RECENT ECONOMIC CONDITIONS ON PERSONAL FINANCIAL SITUATION

PERCENTAGE OF PLAN PARTICIPANTS
Very Negative Somewhat Negative Neutral Positive
Plan Participants 23% 34% 26% 17%
57%
*Source: 2008 Bureau of Labor Statistics data.

20
Workers are keeping a positive attitude about the duration of the recession, and
most expect that their personal financial situation will be no worse in 2010:
four in ten say their personal finances will be “better” and another four in ten
expect them to be “about the same.”
■ Workers most optimistic about their financial well-being in 2010 include:

– Those not negatively impacted by the recent economic downturn
– Individuals who had a life event in past 18 months, especially marriage,
new job, or new home
– Those outside of the five years before or after retirement
– Workers who have at least a four-year college degree
– African-Americans and Hispanics
EXPECTED CHANGE IN 2010 PERSONAL FINANCIAL SITUATION: OVERALL AND BY IMPACT OF ECONOMY
Impact of Economic Conditions

on Financial Situation
Expected Changed in Financial Situation in 2010 Overall Positive Very Negative
Better 40% 43% 33%
Same 41% 35% 33%
Worse 15% 16% 27%
21
Workers Are Concerned About the “Here and Now”
“Job security” and “making ends meet” are at the top of the list of workers’ financial
concerns. More than four in five plan participants rate job security and making ends
meet as “highly important,” ranking them slightly above “having appropriate health
insurance coverage,” which is the perennial top financial concern of U.S. workers.
■ Those most affected by the recession in some way (positively or negatively) are
more likely to rate “job security” and making ends meet as “highly important.”
IMPORTANCE OF PERSONAL AND FINANCIAL NEEDS AND CONCERNS

PERCENTAGE OF PLAN PARTICIPANTS RATING ITEM “HIGHLY IMPORTANT”
Percentage
Having job security 85%
Making ends meet 83%
Having appropriate health insurance 80%
Having your retirement savings last as long as you need 72%
Paying off/reducing household debt 70%
Having financial security if a wage earner can no longer work due to disability/illness 69%
Maintaining a healthy lifestyle 67%
Reducing your stress level and improving emotional well-being 66%
Needing to save for retirement 63%
Achieving a better balance between work and personal life demands 58%
Having a financial plan for achieving major financial goals 56%
Having financial security in the event of a premature death 55%
Having to provide for long-term care needs of either yourself or a spouse 53%
Having enough money for your children’s college education 35%
Finding a trusted source to provide financial advice 29%
22
Among plan participants surveyed, 6% say they lost their job in the past 18 months
but are now employed again.
■ Not surprisingly, those who have lost a job recently are more likely to say
they’ve been negatively impacted by the economy.
Most workers surveyed don’t plan on switching jobs over the next year. Instead, they
plan to continue working for their current employer. The majority (85%) think it is at
least somewhat likely they will be with the same employer one year from now, up
slightly from 2008 results.
■ Those most negatively affected by the economy are less likely to believe they
will be with the same employer one year from now.
LIKELIHOOD OF BEING AT SAME JOB ONE YEAR FROM NOW—OVERALL AND BY IMPACT OF ECONOMY
Impact of Recent
Economic Conditions
Likelihood of Being at Same Job One Year From Now Overall Positive Very Negative
Extremely likely 60% 60% 51%
Likely/somewhat likely 25% 24% 30%
Neutral 6% 10% 6%
Unlikely/not at all likely 7% 5% 11%
23
Saving for Retirement Is a Lower Priority for Many U.S. Workers
This Year as More Immediate Concerns Come to the Forefront
It is increasingly difficult for the average worker to put money aside for an individual
retirement account or 401(k) plan when the economy and job markets are so volatile.
Most personal and financial needs and concerns have increased in importance
among plan participants in the past few years. However, “saving for retirement”
has not increased in importance. In fact, the importance of saving for retirement has
declined over the past three years, with a steep drop in 2009. This year, only 63%
of plan participants say saving for retirement is “highly important” to them —
down 13 percentage points from 2008.
■ The financial crisis may have left workers more cautious about making financial
decisions or seeking financial advice, as fewer rated “finding a trusted source
for financial advice” as highly important in 2009 (-10 points). Or, they may not
have the income to invest, or to pay for investment advice.
Workers are less certain about when they are going to retire. In 2009, 14% say they
don’t know when they are going to retire, compared with 9% last year. The mean
expected retirement age is slightly higher this year (64.1) compared with last year (63.5).
■ Those most negatively affected by the recent economic conditions are

the most likely to be unsure about their planned retirement age (19%).
IMPORTANCE OF PERSONAL AND FINANCIAL NEEDS/CONCERNS—

LARGEST DECLINES FROM 2007–2009
Change
2007 2008 2009 2007–2009
Finding a trusted source to provide
financial advice 39% 40% 29% -10
Needing to save for retirement 76% 73% 63% -13
24
401(k) and Pension Plans Continue to Be a Major Consideration
for Those Making Job Decisions
In fact, all seven categories of benefits evaluated are increasingly important to workers
when making job-related decisions — most notably medical plans and paid time off.
Retirement plans have grown in importance, as well, with two-thirds of workers rating
401(k) and pension plans as “highly important” when making job decisions.
The two most significant benefits in terms of immediate dollar value to workers —
s alary and medical insurance — are rated most important and increased considerably
in 2009.
Other health and welfare insurance programs are also key factors in job decisions,
namely, dental plans (57% rate it “highly important”), disability insurance (48% rate
it “highly important”), long-term care insurance (44% rate it “highly important”),
and life insurance (42% rate it “highly important”).
IMPORTANCE OF SPECIFIC BENEFITS IN MAKING JOB DECISIONS—2007–2009

Change
2007 2008 2009 2007–2009
Salary 74% 80% 87% +13
Medical insurance 64% 78% 86% +22
Paid time off 53% 62% 72% +19
Retirement plan 50% 63% 67% +17
Insurance benefits
(life, disability, dental, long-term care) 32% 45% 49% +17
Job flexibility
(telecommuting, flex-time, job-sharing) 32% 31% 38% +6
Bonus 24% 31% 31% +7
Note: Ranked based on 2009 ratings.
25
Protection Against Unexpected Loss of Income or the Need for Extended
Nursing Care Is of Greater Concern to U.S. Workers Now Than Several
Years Ago
Workers are increasingly recognizing the importance of financially protecting
themselves and their families from the unexpected, such as the premature death
of a primary wage earner, job loss, or a disability, perhaps due to the economic
climate and greater awareness of the financial impact of these events.
Also, improving one’s overall health through exercise and nutrition has grown
in importance, especially in 2009. Consequently, there may be greater interest
in employer-sponsored wellness and prevention programs in the coming year.
Greater concern about financial security and insurance protection actually appears
to be translating into action. Nearly half of U.S. workers say they re-evaluated their
life insurance needs within the past year, which is a significant increase from 2008
(47% vs. 39%). And the percentage who say they have never researched their life
insurance needs dropped to 11% from 15% the prior year.
26
IMPORTANCE OF PERSONAL AND FINANCIAL NEEDS/CONCERNS—
LARGEST INCREASES FROM 2007–2009
Change
2007 2008 2009 2007–2009
Having to provide for long-term care needs
of self/spouse 40% 44% 53% +13
Having financial security if a wage earner
can no longer work due to a disability
or serious illness 60% 65% 69% +9
Having financial security in the event
of premature death 47% 57% 55% +8
Maintaining a healthy lifestyle 62% 57% 67% +5
RE-EVALUATION OF LIFE INSURANCE NEEDS—2008 VS. 2009

Change
2008 2009 2008–2009
Less than 1 year 39% 47% +8
1–2 years 23% 25% +2
3–4 years 11% 8% -3
5+ years 12% 9% -3
Never 15% 11% -4
27
Expertise Is Essential —Turbulent Times Call
for Expert Advice: Plan Sponsors’ Need for Benefits
Advice and Guidance From Brokers/Consultants Has
Never Been Greater
The Economic Downturn of the Past Year Has Already Had

a Considerable Effect on the Employee Benefits Industry
No one knows exactly how significant and long-lasting the impact of the recent
economic downturn will be on plan sponsor organizations, benefits brokerage and
consulting firms, insurance carriers, and legal/regulatory entities.
Benefits brokers and consultants can play a critical role in helping plan sponsors
develop comprehensive benefits strategies that meet their companies’ needs —
maintaining a reasonably competitive benefits program while identifying opportunities
for greater efficiency and cost savings.
CURRENT USE OF BENEFITS BROKERS/CONSULTANTS AMONG PLAN SPONSORS
83%
Use Broker and/or
Consultant
17%
Use Neither
28
Most Plan Sponsors Rely on Benefits Brokers/Consultants for Help With
Their Employee Benefits Programs
Benefits brokers and consultants have been providing valued benefits advice and
support to employers of all sizes for many years. That trend continues today, as more
than eight in ten plan sponsors say they use a broker and/or consultant for assistance
with their employee benefits programs.
Of the 17% who do not currently use a broker or consultant, over half (11%) expect
to begin working with an intermediary in the next five years.
Smaller firms, particularly those with fewer than 1,000 employees, are more likely
to utilize the services of a broker and/or consultant mainly because these companies
typically have small or no human resources staff. More than three in four large
companies (1,000+ employees) indicate that they will work with a broker or
consultant on specialized assignments.
However, large firms are more likely than smaller firms to expect a decrease in their
use of brokers/consultants in the next five years, or to say they are unsure of their
plans. This finding suggests an opportunity for intermediaries to provide greater
consultation and support on the innovative and specialized solutions required by
large employers.
PLAN SPONSORS’ CURRENT AND FUTURE USE OF BENEFIT BROKERS/CONSULTANTS BY EMPLOYER SIZE
50–99 100–499 500–999 1,000–4,999 5,000+
All Employees Employees Employees Employees Employees
Currently use a broker/consultant 83% 82% 88% 84% 78% 74%

Use of broker/consultant will increase in the next five years 17% 15% 18% 19% 15% 18%
Use of broker/consultant will stay the same in the next five years 64% 68% 67% 66% 54% 54%
Use of broker/consultant will decrease in the next five years 8% 6% 6% 10% 15% 14%
Don’t know how use of broker/consultant will change 11% 11% 9% 5% 16% 14%
29
Plan Sponsors Who Take a More Strategic Approach to Employee Benefits
Place Greater Value on Guidance From Brokers/Consultants
Regardless of employer size or industry, plan sponsors who use benefits in a more
strategic way to support their companies’ business and financial objectives are more
likely to be working with a benefits broker/consultant. For example, plan sponsors
who currently use a broker/consultant are more likely to say that their firms:
■ View employee benefits as strategically important
■ Link their employee benefits strategy closely to their business strategy and
financial goals
■ Place high importance on helping employees make better benefits decisions

through improved education and communication
■ Make plan design changes to reduce benefits costs
■ Use benefits technology to improve efficiency and drive down costs
In addition, public firms and U.S.-based multinationals are more likely to use the
assistance of a broker/consultant.
BENEFITS PHILOSOPHY OF PLAN SPONSORS BY CURRENT USE OF BROKER/CONSULTANT

PERCENTAGE OF PLAN SPONSORS RATING ITEM “VERY IMPORTANT”
Use a Broker/Consultant
Benefits Philosophy Yes No
Upper management sees employee benefits as being strategically important for the company 57% 47%
Closely links benefits decisions with business strategy and financial goals 54% 45%
Places high importance on communication/education to help employees
make better benefits decisions 56% 43%
Making plan design changes to control benefits costs 40% 27%
Places high importance on the use of benefits technology to control costs 33% 23%
30
Nine in ten plan sponsors are satisfied overall with the support they receive from their
broker/consultant, with 40% being “highly satisfied.” The largest companies (5,000+
employees) give somewhat lower ratings to their brokers/consultants, while 12% of
them are unsure about their level of satisfaction — underscoring the opportunity for
intermediaries to better understand and meet the needs of this plan sponsor segment.
SATISFACTION OF PLAN SPONSORS WITH BROKER/CONSULTANT SUPPORT BY SIZE OF EMPLOYER

50–99 100–499 500–999 1,000–4,999 5,000+
All Employees Employees Employees Employees Employees
Highly satisfied 40% 40% 44% 41% 35% 21%

Satisfied 51% 53% 47% 53% 51% 65%
Not satisfied 7% 7% 7% 6% 10% 2%
Not sure 2% 0 2% 0 4% 12%
31
Overall, Brokers/Consultants and Plan Sponsors Have Similar Philosophies
and Priorities Regarding Benefits, but Not on How to Achieve Clients’
Benefits Objectives
Nearly six in ten plan sponsors and brokers/consultants agree that benefits are
viewed as being strategically important by upper management on the client side.
Furthermore, at least four in ten agree that offering competitive benefits to attract
and retain talent is highly important. There is also agreement that a shrinking
minority of plan sponsors seek to pay for most or all of the benefits costs.
However, there are differences of opinion between plan sponsors and brokers/
consultants in terms of how they expect to achieve those benefits objectives. For
example, brokers/consultants are more likely than plan sponsors to emphasize the
use of cost-sharing as a cost-containment strategy. They are also more likely than
plan sponsors to focus on efficiencies from benefits technology, consumer-directed
plans, improving workforce health, and targeted employee communications.
PLAN SPONSOR APPROACHES TO EMPLOYEE BENEFITS—

AS PERCEIVED BY BROKERS/CONSULTANTS VS. PLAN SPONSORS
PERCENTAGE RATING ITEM “HIGHLY IMPORTANT”
Plan Sponsors Brokers/Consultants Difference

Upper management sees employee benefits as being strategically
important for the company/client 55% 59% +4
Company/client offers its employees a wide range of benefits 46% 54% +8
Company/client offers significantly better benefits than others in
their industry, having a positive effect on attracting and/or retaining
the employees they seek 43% 48% +5
Company/client pays all or most of the cost for employee benefits 37% 40% +3
32
TOP PLAN SPONSOR BENEFITS STRATEGIES IN 2014—
AS PERCEIVED BY PLAN SPONSORS VS. BROKERS/CONSULTANTS

Cost-sharing—asking employees to bear a greater portion of the
costs of benefits 42% 69% +27
Giving more financial responsibility to employees through
high-deductible health plans, health savings accounts (HSAs), etc. 44% 65% +21
Attempting to control benefits costs by addressing the health of the
work force by promoting wellness, prevention, and work/life balance 57% 77% +20
Applying/using Internet technology to reduce benefits costs or to
increase efficiency 59% 78% +19
Increasing employee education and/or advice—helping employees
understand how to make the best choices 51% 68% +17
Tailoring communication and enrollment to meet the needs
of various employee segments 38% 55% +17
33
Controlling Benefits-Related Costs Is a High Priority at Most Companies—
Implementing Effective Cost-Containment Strategies Will Be Critical Over
the Next Five Years
The recession of 2008 and 2009 has put even greater pressure on employers
to re-evaluate their employee benefits programs and identify additional ways
to reduce costs. Consequently, increased attention has been given to more
innovative solutions since 2007, such as return-to-work initiatives and integrated
health care/disability management.
Looking ahead to 2014, brokers/consultants and plan sponsors agree that plan
design changes and cost-sharing will continue to be among the most common
approaches to controlling benefits costs. Nonetheless, further gains are still expected
from wellness and absence management/productivity initiatives, especially among
companies with at least 1,000 employees.
The degree to which brokers/consultants expect all cost-containment strategies to

increase in importance is higher when compared with plan sponsors; however, the
two groups tend to agree on the relative prioritization of those strategies. The most
noteworthy gaps are on the anticipated use of consumer-directed health plans,
voluntary benefits, and switching to insured arrangements from self-funded plans.
34
EMPLOYERS’ TOP COST MANAGEMENT STRATEGIES IN 2014—
AS PERCEIVED BY PLAN SPONSORS AND BROKERS/CONSULTANTS

Make plan design changes to control benefits costs 54% 69% +15
Implement consumer-directed health plans 37% 61% +24
Share more of the cost of contributory benefits with employees 38% 55% +17
Coordinate/integrate parts of your medical, pharmacy, disability,
and workers’ compensation plans 35% 53% +18
Use fewer carriers and/or consolidating carriers to reduce costs
and/or improve efficiencies 44% 52% +8
Provide a wider array of voluntary benefits offerings
(i.e., employees pay 100% of the cost) 30% 51% +21
Provide accommodations to assist employees in returning to work
following a leave, illness, or disability 34% 48% +14
Use purchasing groups to control benefits costs 33% 43% +10
Increase outsourcing of benefits administration 29% 41% +12
Shifting more risks to benefits providers by converting self-insured
plans to insured plans 17% 38% +21
Using life insurance as a way of pre-funding future retiree
benefits liabilities 14% 33% +19
Note: Ranked based on broker/consultant results.
35
The Role of Benefits Brokers/Consultants Is Wide-Ranging and Valuable
in Different Ways for Different Companies
Brokers/consultants are used by plan sponsors for a variety of purposes, from providing
benefits plan design recommendations and general advice to supporting enrollment
and communication needs and soliciting bids from insurance carriers. On average,
plan sponsors say they use their brokers/consultants for at least six different activities
from among a list of eleven (see table on the next page). Conversely, brokers/consultants
believe their clients use them primarily to shop for lower rates.
Notably, “consulting on overall benefits strategies” is the top mention among plan
sponsors in terms of how they use their brokers/consultants; nearly two-thirds (65%)
use brokers/consultants in this way. Providing “general advice” (63%) is the second-
most popular reason plan sponsors use brokers/consultants. “Shopping for the best
prices” (56%) is tied for third with “evaluating different providers” (55%).
The ways plan sponsors say they use brokers/consultants varies widely by employer size.
■ For example, smaller firms (<500 employees) tend to use their brokers/consultants
to do a wider range of activities, because they lack the resources to handle
those tasks in-house. They are more likely than large companies to rely on
brokers/consultants to deliver benefits orientations and to function as an
intermediary between clients and carriers on service issues.
■ Among large employers (10,000+ employees), 77% cite “consulting on overall

benefits strategies” as a reason for using brokers/consultants, more than any
other employer segment. “Shopping for the best prices” is mentioned more often
by smaller companies (<1,000 employees) than larger ones—65% vs. 50%.
36
SPECIFIC WAYS THAT BENEFITS BROKERS/CONSULTANTS CURRENTLY SUPPORT THEIR CLIENTS
PERCENTAGE RATING ITEM “TO A GREAT DEGREE”

Educating employees on their health care needs and costs 41% 40% -1
Recommending benefits plan design changes 52% 45% -7
Providing service to benefits plan administration as a conduit
to the plan providers 34% 33% -1
Shopping for the best prices (lowest-priced carriers/products) 56% 54% -2
Consulting on overall benefits strategies 65% 45% -20
Delivering benefits orientations 49% 37% -12
Consulting on plan implementation 53% 42% -11
Evaluating different providers 55% 44% -11
Benefits legislation/regulation updates and information 43% 39% -4
Serving as an intermediary with client and carrier on service issues 37% 39% +2
General advice 63% 43% -20
37
Use of Brokers/Consultants Will Likely Increase Over the Next Five Years as
Plan Sponsors Seek Further Assistance Managing Costs While Maintaining
Competitive Benefits Packages
Only about one in four brokers/consultants (26%) say their clients have relied on
their expertise, service, and support more heavily in the past year, but many more
expect that trend to continue. In fact, nearly twice as many (48%) expect their clients
to use their services to a greater extent over the next five years.
Plan sponsors also anticipate increasing their use of brokers/consultants by 2014, but
to a lesser extent. Only 17% of plan sponsors expect to rely more heavily on their
brokers/consultants over the next five years while nearly two-thirds expect their
usage to remain about the same as it is today.
ANTICIPATED CHANGE IN FUTURE USE OF BENEFITS BROKERS/CONSULTANTS

PERCENTAGE OF PLAN SPONSORS AND BROKERS/CONSULTANTS

Increase use in next five years 17% 48% +31
Remain the same 64% 31% -33
Decrease use in next five years 8% 14% +6
Unsure 11% 7% -4
38
Brokers and consultants see their role in supporting clients evolving over the next five
years. Specifically, they anticipate providing greater consultation and guidance on
cost-containment strategies, such as helping to educate employees on their health
care needs and costs (64%, or +24 points from 2009) and recommending plan
design changes (65%, or +20 points).
Interfacing with benefits carriers, shopping for the best rates, consulting on benefits
strategies, and delivering benefits orientations are all expected to increase by 2014,
as well.
■ Those brokers/consultants who primarily serve the large market are more likely
to view their future role as expanding in a strategic way compared with those
handling mainly small and mid-size clients.
SPECIFIC WAYS BROKERS/CONSULTANTS ARE USED BY THEIR CLIENTS—2009 VS. 2014

PERCENTAGE OF BROKERS/CONSULTANTS
Change
2009 2014 2009–2014
Educating employees on their health care needs and costs 40% 64% +24
Recommending benefits plan design changes 45% 65% +20
Providing service to benefits administrators (conduit to plan providers) 33% 50% +17
Shopping for best prices (lowest-priced carriers/products) 54% 70% +16
Consulting on overall benefits strategies 45% 61% +16
Delivering benefits orientations 37% 53% +16
Consulting on plan implementation 42% 57% +15
Evaluating different providers 44% 58% +14
Benefits legislation/regulation updates and information 39% 53% +14
Serving as an intermediary with client and carrier on service issues 39% 53% +14
General advice 43% 55% +12
39
Helping Clients Design Benefits Programs That Address the Needs
of an Increasingly Diverse Work Force Is a Growing Opportunity for
Brokers/Consultants
Most plan sponsors rate workforce diversity issues as “highly important” to
their overall benefits strategy, which is consistent with our 2008 results. Yet,
plan sponsors have not made much progress on this objective, most likely
because cost-containment efforts have been a priority over the past year.
Furthermore, plan sponsors have tempered their expectations for making progress
on diversity issues over the next five years. Thus, brokers and consultants could be
of great help to clients looking to design and launch programs targeting the needs
of specific segments of the work force.
In the next five years, brokers/consultants expect to work more closely with their clients
to recommend targeted benefits programs for specific employee segments. However,
plan sponsors place somewhat less emphasis on addressing diversity issues by 2014.
■ Benefits for a diverse work force are most relevant for larger companies;
therefore, brokers and consultants who focus on the large market are
the most active in the following areas: balancing work and personal life,
single working parents, a multigenerational work force, and a multilingual/
multicultural work force.
40
IMPORTANCE OF WORKPLACE DIVERSITY ISSUES AS PERCEIVED BY PLAN SPONSORS—2009 VS. 2014
Change
2009 2014 2009–2014
The growing number of employees age 50 and older 26% 46% +20
A multigenerational work force 24% 38% +14
Balancing work and personal life 33% 46% +13
A multilingual/multicultural work force 22% 35% +13
Same-sex partners 11% 24% +13
Single working parents 27% 39% +12
Workforce education and income gaps 17% 28% +11
Dual working couples 23% 33% +10
IMPORTANCE OF WORKPLACE DIVERSITY ISSUES BY 2014 AS PERCEIVED BY PLAN SPONSORS

AND BROKERS/CONSULTANTS

The growing number of employees age 50 and older 46% 68% +22
A multilingual/multicultural work force 35% 56% +21
Workforce education and income gaps 28% 44% +16
Same-sex partners 24% 40% +16
A multigenerational work force 38% 52% +14
Dual working couples 33% 45% +12
Balancing work and personal life 46% 57% +11
Single working parents 39% 48% +9
41
Show Them the Value — What Is Said
Is as Important as How It’s Said:
Helping Workers Understand and Appreciate
the Value of Their Employee Benefits Is Vital
Benefits Have Lost Some Luster in 2009, but Remain Important to

Individuals Making Job Decisions and Plan Sponsors Striving to Keep
Their Benefits Packages Competitive
Nearly three in four (73%) plan sponsors believe that benefits are “highly important”
to employees when deciding whether to stay with their current company or take a
new job. While benefits are indeed a key job-decision criterion, the degree to which
benefits are important is somewhat lower compared with prior years, as illustrated
below. The lower ratings may be due to the result of jobs and income becoming a
much greater concern as of late.
Two in three plan sponsors agree that “offering significantly better or more generous
benefits than others in our industry gives our company a significant advantage,
including having positive effects on attracting and/or retaining the employees we
seek.” Further, a majority view benefits as strategically important to their senior
management and are closely linked to their business and financial goals.
Brokers and consultants recognize that offering a competitive benefits program

helps clients achieve their staffing goals even more than their clients do. About eight
in ten brokers/consultants agree that staffing goals are important to their clients,
while seven in ten say that benefits are viewed as strategically important to their
clients’ senior management and that benefits are closely linked to their clients’
business strategy and financial goals.
EMPLOYEE BENEFITS PHILOSOPHY OF PLAN SPONSORS AND BROKERS/CONSULTANTS

PERCENTAGE RATING EACH ITEM “SOMEWHAT IMPORTANT”/“SOMEWHAT AGREE”
Benefits Philosophy Plan Sponsors Brokers/Consultants

Upper management sees employee benefits as being strategically important to the company 78% 81%
Offers significantly better benefits than others in their industry, having a positive effect
on attracting and/or retaining the employees they seek 66% 74%
Closely links benefits decisions with business strategy and financial goals 53% 70%
42
A Volatile Job Market Has U.S. Workers Feeling Less Positive About
the Value of Their Employee Benefits
For the most part, employers have not been adding benefits or increasing funding
of existing benefits during the past year. Rather, many plan sponsors were likely to
be restructuring, downsizing, or merging, which all contributed to increased financial
belt-tightening and, consequently, flat or even reduced benefits.
Job security became a primary concern among the U.S. work force in 2009, and
their attitudes toward most workplace issues are less favorable than in prior years.
For example, the perceived value of employee benefits is relatively flat compared
with previous years; 51% rate their employer’s benefits package as “highly valuable,”
down slightly from 54% in 2008.
IMPORTANCE OF EMPLOYEE BENEFITS IN JOB DECISIONS

Change
Level of Importance 2007 2008 2009 2007–2009
High 84% 83% 73% -10
Moderate 14% 15% 23% +8
Low 2% 2% 4% +2
PERCEIVED VALUE OF EMPLOYER’S OVERALL BENEFITS PACKAGE

Change
Perceived Value 2007 2008 2009 2008–2009
High 53% 54% 51% -3
Moderate 29% 24% 25% +1
Low 18% 22% 24% +2
43
In 2009, more workers believe that their employers are cutting back on benefits:
42% say benefit levels have decreased this year compared with just 30% in 2008.
This trend in perceived benefits reductions has negatively impacted plan participant
attitudes toward the value of benefits.
PERCEIVED CHANGE IN EMPLOYEE BENEFITS PACKAGE FROM 2008

Change
Perceived Change from 2008 2007 2008 2009 2008–2009
Increased 9% 14% 7% -7
Remained the same 52% 53% 49% -4
Decreased 34% 30% 42% +12
Don’t know 5% 3% 2% -1
44
A Well-Executed Communication Strategy Can Effectively Educate Plan
Participants and Positively Influence Attitudes Toward Their Benefits Package
Employees need to be aware of and understand the value of the benefits available
to them in order to appreciate those benefits. Therefore, it is essential that benefits
be successfully explained and promoted throughout the organization.
Interestingly, communications can have as much impact on worker satisfaction with

benefits as the range of benefits offered or the perceived dollar amount of employer
contributions.
The perceived value of benefits directly influences their importance to workers when
selecting a job or deciding to stay with their current employer, as illustrated below.
DRIVERS OF PERCEIVED EMPLOYEE BENEFITS VALUE* BASED ON PLAN PARTICIPANT RATINGS

Beta Weights
Effectiveness of
.33
Communications
Value of Importance of
Company Pays All or Employee Employee
.30
Most of Benefits Costs Benefits to Benefits in Job
Employee Selection
Company Offers a Wide Range
.29
of Benefits
*This chart is based on a multivariate statistical analysis (multiple regressions). The beta weights represent the impact
of each variable on the perceived value of employee benefits, taking all three variables into account.
Naturally, plan participants who place a greater value on benefits consider them to
be more important in job selection compared with those who see little to no value
in them (as shown below). Among those who rate their company’s benefits as
“highly valuable,” 81% say employee benefits are “very important in job selection,”
compared with 57% of those who say their benefits are of “low” value.
IMPORTANCE OF BENEFITS IN JOB DECISIONS BY PERCEIVED VALUE OF BENEFITS

High Perceived Low Perceived

Importance of Benefits in Job Decisions Value of Benefits Value of Benefits
High 81% 57%
Moderate 16% 33%
Low 3% 10% 45
Moreover, plan participants who rate their benefits communications as “highly effective”
see greater value in their benefits package overall: 85% say their benefits are of great
value, compared with 49% of those who believe their employers’ communications
are moderately effective and just 19% of those who rate the communications
as ineffective.
Additionally, those who give high marks to their benefits communications are also
more favorable toward voluntary benefits (i.e., the employee pays 100% of the cost);
49% say that offering voluntary benefits increases the overall value of their benefits
package, compared with 33% who rate communications as somewhat effective
and just 20% of those rating it less than effective.
PERCEIVED VALUE OF EMPLOYEE BENEFITS BY SATISFACTION WITH COMMUNICATION EFFECTIVENESS

Highly Effective 85%

Communications
Somewhat Effective
Communications
Ineffective
Communications 49% 49%
33%
19% 20%
Those Who Say Employee Benefits Those Who Say Voluntary Benefits
Are Highly Valuable Highly Increase the Value of Benefits
46
Enhancing Employee Communications Can Be a Cost-Effective Way for
Plan Sponsors to Increase the Perceived Value of Their Benefits Programs
As employers face continued pressure on their benefits budgets, it is increasingly
important to effectively advertise the value of the total benefits package. Given
that most benefits programs are expected to be flat or even reduced in the next
five years, plan sponsors can help offset those cutbacks and generate goodwill by
promoting the value of their current benefits and the financial investment already
made by the company.
However, the effectiveness of benefits communications continues to underwhelm,

with a majority of plan sponsors and participants agreeing that current communication
efforts are not “highly effective.” Consistent with results from prior years, only 27%
of employers rate their company’s benefits communications as “highly effective,”
up slightly from 21% in 2007. Plan participants generally share this view but are
somewhat more positive: 38% of plan participants rate their company’s benefits
communications as “highly effective,” a modest increase from 35% in 2007.
Plan sponsors who rate their benefits communications as “highly effective”:
■ Tend to be the largest firms (10,000+ employees) with larger human resources
staffs, on average (7.7 vs. 5.8 staff members for those rating communications
neutral/ineffective).
■ Are more likely to say their benefits staff will increase over the next five years
(37% vs. 29% for neutral/ineffective).
EFFECTIVENESS OF BENEFITS COMMUNICATIONS—2007–2009

PERCENTAGE OF PLAN SPONSORS AND PLAN PARTICIPANTS
Highly 35% 40% 38% 21% 22% 27%

Effective
Somewhat 57% 61%
Effective 58%
48% 44%
Ineffective 43%
22%
17% 17% 18% 17% 15%
2007 2008 2009 2007 2008 2009

Plan Participants Plan Sponsors 47
Delivering the Right Benefits Messages to the Right Employees
Is Essential to Getting Their Attention and Keeping Them Engaged
To improve the effectiveness of benefits communications, it is important to address
the needs of different employee segments based on their life stage, type of family
unit, and marital status. An unmarried employee in his 20s typically has different
personal and financial concerns than a married employee in her 40s with children.
And these employees likely have different needs and concerns than someone who
is close to retirement. For example:
■ While all plan participants are concerned about having appropriate health
insurance coverage, those with dependents place significantly more importance
on their health coverage than those without dependents. This holds true whether
the employee is married or single.
■ Married workers (with or without dependents) place greater importance on

certain financial/lifestyle concerns than do single workers. This is true for having
financial security in the event of a premature death, paying off or reducing
household debt, and achieving a better work/life balance.
■ Those who are married with no dependents arguably have the most disposable
income and more personal time, enabling them to place more importance on
maintaining a healthy lifestyle.
48
IMPORTANCE OF EMPLOYEE FINANCIAL/LIFESTYLE CONCERNS BY LIFE STAGE
PERCENTAGE OF EMPLOYEES RATING ITEM “HIGHLY IMPORTANT”
Single, Single, Married, Married,

No Dependents Dependents No Dependents Dependents
Percentage of all workers surveyed 29% 12% 8% 51%
Job security 82% 90% 85% 85%
Making ends meet 80% 88% 81% 84%
Having appropriate health insurance 72% 85% 83% 83%
Maintaining a healthy lifestyle 70% 65% 83% 64%
Having your retirement last as long
as you need it to 68% 69% 74% 74%
Reducing stress/improving well-being 67% 62% 73% 64%
Paying off/reducing household debt 64% 69% 80% 72%
or serious illness 62% 59% 72% 75%
Needing to save for retirement 58% 63% 73% 63%
Having a plan for major financial goals 54% 51% 67% 57%
Achieving a better work/life balance 50% 58% 71% 62%
Providing for long-term care needs
of self or a spouse 48% 44% 52% 58%
Financial security in the event of
a premature death 31% 46% 69% 68%
financial advice 28% 22% 38% 29%
Having enough money for children’s
college education 15% 50% 18% 46%
49
If plan sponsors approach employees with benefits information that is personally
relevant, they may be more engaged. For instance, a married worker with dependents
will generally be more engaged in communications about life insurance, a college
savings plan, or long-term care insurance, compared with a single employee with
no dependents.
In the past three years, employers appear to be more receptive to using certain
employee demographic data (with employee permission) to tailor benefits
communication to specific segments of their population. In 2009, 73% of
plan sponsors surveyed say they would be at least willing to use employee
data for targeting their benefits messaging — up from 69% in 2007.
WILLINGNESS OF PLAN SPONSORS TO USE EMPLOYEE DATA TO TAILOR BENEFITS COMMUNICATIONS

Willing 69% 73% 73%

Unwilling
31%
27% 27%
2007 2008 2009
50
Workers also continue to show interest in this type of targeted communication
approach. Half of plan participants surveyed in 2009 say they are “highly interested”
in receiving benefits communications that are relevant to their own and/or family’s
situation and needs. Another 38% are “moderately interested.”
Given the many differences in employees’ personal and financial lives, a more targeted
benefits communication strategy may help improve the perceived effectiveness of
benefits communications.
INTEREST OF PLAN PARTICIPANTS IN RECEIVING TAILORED BENEFITS COMMUNICATIONS

Don’t Know Low Moderate High
Plan Participants 1% 11% 38% 50%
51
Using the Right Methods of Communication Is Also Critical
As more technologically advanced methods of communication become available in
the workplace, it only makes sense that employers should make full use of them
to engage employees.
A communication can be as high touch as one-on-one meetings or as high-tech

as a seminar via the Internet. Employees who rate their benefits communications as
“highly effective” report having access to a wider range of communication options,
from group meetings to e-mail messages to videos.
Plan participants most prefer group meetings/seminars held during the work day (52%),
followed by e-mail received at the workplace (45%), mail received at home (43%), and
one-on-one meetings held during the work day (33%). Least preferred are individual
or group meetings/seminars held during non-work hours (7% and 5%, respectively).
There are several differences in preferences by type of family unit, most notably:
■ Single workers with no dependents are more likely than others to prefer individual,
one-on-one meetings with a financial professional during the work day, while
single workers with dependents are more likely to prefer group meetings during
the work day.
■ Married workers with no dependents are more likely than others to prefer
benefits information be sent to their personal e-mail addresses.
An employee’s life stage — including age, marital status, and parental status —
also influences preferences for benefits information sources.
■ Married workers with no dependents are more likely than others to believe
that enrollment materials are the most helpful source of benefits information.
■ Workers with dependents (whether single or married) are more likely than
workers with no dependents to prefer to consult their human resources
department when making benefits decisions.
52
PREFERRED WAYS TO RECEIVE EMPLOYEE BENEFITS INFORMATION BY TYPE OF FAMILY UNIT

Total No Dependents Dependents No Dependents Dependents
Percentage of workers surveyed 100% 29% 12% 8% 51%

Group meetings, seminars during work day 52% 53% 61% 49% 49%
E-mail received at the workplace 45% 46% 47% 47% 43%
Mail received at home 43% 40% 47% 48% 42%
Individual, one-on-one meetings with a financial professional
during the work day 33% 40% 32% 22% 31%
Mail received at the workplace 25% 26% 21% 29% 25%
An online presentation (Internet or intranet) of benefits information 25% 24% 24% 20% 26%
E-mail received at home 18% 19% 22% 27% 16%
A video, CD-ROM, or DVD presentation of benefits information 15% 14% 17% 12% 16%
Individual one-on-one meetings with a financial professional
during non-work hours 7% 8% 3% 5% 7%
Group meetings/seminars during non-work hours 5% 7% 6% 9% 4%
PREFERRED RESOURCES FOR MAKING BENEFITS DECISIONS BY LIFE STAGE


Total No Dependents Dependents No Dependents Dependents
Percentage of workers surveyed 100% 29% 12% 8% 51%

Reading benefits enrollment materials 61% 58% 65% 69% 61%
Speaking to human resources department 49% 44% 54% 44% 52%
Going to benefits enrollment meetings 44% 46% 49% 46% 41%
Using web-based needs assessment tools 31% 34% 28% 44% 27%
Having access to a financial professional on-site during
the benefits enrollment 21% 22% 23% 17% 20%
53
Long-Term Care Insurance — A Pillar of
Retirement Planning: Workers Are Becoming
More Aware of the Need for Long-Term Care Services,
But Further Education and Planning Are Required
U.S. Workers Are Increasingly Concerned About the Financial Impact

of Future Long-Term Care Needs
Over the past decade, the media has spotlighted trends related to long-term care
such as the aging Baby Boomers, increased longevity, post-retirement finances and
lifestyles, and nursing-care costs. Workers are not only reading and hearing more
about these topics but many are experiencing them first-hand. According to AARP,
an estimated 52 million people in the U.S. provided family caregiving in 2007 at an
estimated economic value of $375 billion.*
Not surprisingly, workers are more aware of their future long-term care needs. More
than half (53%) of plan participants surveyed this year rate long-term care needs as
“highly important” compared with 40% in 2007. The 13-percentage point increase
is the largest among all financial needs evaluated in 2009.
Those who are more concerned than others about “providing for the long-term care
needs of self/spouse” are:
■ Older (importance increases with age)
■ Married
■ Less educated
*Source: AARP: “Valuing the Invaluable: The Economic Value of Family Caregiving, 2008 Update.”
54
IMPORTANCE OF EMPLOYEE FINANCIAL/LIFESTYLE CONCERNS
PERCENTAGE OF PLAN PARTICIPANTS RATING “HIGHLY IMPORTANT”
Change
Benefits Objectives 2007 2008 2009 2007–2009
Having to provide for long-term care
needs of either yourself or a spouse 40% 44% 53% +13
or serious illness 60% 65% 69% +9
Financial security in the event of
a premature death 47% 57% 55% +8
Maintaining a healthy lifestyle 62% 57% 67% +5
Having a plan for achieving financial goals 53% 55% 56% +3
Having enough money for children’s
college education 33% 37% 35% +2
Having appropriate health insurance 83% 86% 80% -3
financial advice 39% 40% 29% -10
Needing to save for retirement 76% 73% 63% -13
55
One in Two U.S. Workers Has Some Experience, Directly or Indirectly,
With Long-Term Caregiving
As the U.S. population ages (and lives longer), the need for long-term care services
is expected to grow rapidly. Many people who lack the funds to pay for their care
are turning to loved ones, friends, and relatives for assistance.
Just over half (51%) of workers surveyed in 2009 indicate that they (or their spouse)
have provided daily care and/or they personally know someone who provided care to
a relative for an extended period of time due to an injury, mental or physical illness,
or old age.
One in six workers has direct experience with long-term care; 17% of those surveyed
say they personally have provided care for a family member or relative. Another 46%
know someone who has been a caregiver (12% have both direct and indirect experience
with caregiving).
EXPERIENCE WITH CAREGIVING

5%
Has
Provided
Long-Term
12% Care
Provided Care
and Knows
Someone Who
Provided Care
49%
No Caregiving
Experience
34%
Knows Someone
Who Provided Care
56
Workers in their mid-50s to 60s are more likely to have provided care to a family
member or relative. They are also more likely to know someone who has provided
care, compared with those in their late 20s and 30s. As a result, older workers are
more keenly aware of their own potential long-term care needs. Unfortunately, the
cost of long-term care insurance is more expensive at their age and becomes a barrier
to many buying the coverage. This underscores the importance of educating younger
workers about the benefits of buying long-term care insurance at an earlier age.
Half of young workers surveyed (ages 22 to 24), who may be children of caregivers, have
indirect experience with providing care to older relatives—significantly more experience
than those in their late 20s and 30s. This trend is likely to continue as future generations
of young workers are more likely to have direct or indirect experience with caregiving
for their Baby Boomer parents or grandparents. Having witnessed the financial and
emotional impact of caregiving, they may be more interested than previous generations
in long-term care insurance as an option for them or their parents.
EXPERIENCE WITH CAREGIVING BY AGE

22–24 25–34 35–44 45–54 55–64 65+

Self and/or spouse provided care 14% 10% 16% 20% 27% 33%
Knows someone who provided care 50% 37% 45% 53% 53% 55%
57
In General, Workers With Caregiving Experience Place Greater Value
on Long-Term Care Insurance and Employee Benefits
Not surprisingly, those who have either direct or indirect experience with caregiving
are more concerned about financial security and health insurance issues compared
with those with no experience. For example, those with caregiving experience place
greater importance on:
■ “Having financial security if a wage earner can no longer work due to

a disability or serious illness” (74% vs. 64% of those with no experience).
■ “Having to provide for own/spouse’s long-term care needs”

(57% vs. 49% of those with no experience).
Job seekers with direct or indirect caregiving experience rate long-term care, disability,
and life insurance benefits as more important than those with no caregiving experience.
Perhaps because those with caregiving experience often witness how the lack of
adequate insurance coverage and flexible work arrangements can drain financial
and other resources.
IMPORTANCE OF EMPLOYEE FINANCIAL/LIFESTYLE CONCERNS BY CAREGIVING EXPERIENCE

PERCENTAGE OF PLAN PARTICIPANTS RATING “HIGHLY IMPORTANT”
No Caregiving Caregiving
Experience Experience Difference
Having appropriate health insurance 76% 83% +7
Having your retirement savings last as long as you need it 68% 75% +7
Having financial security if a wage earner can no longer work
due to a disability or serious illness 64% 74% +10
Reducing your stress level and improving emotional well-being 61% 70% +9
Achieving a better work/life balance 53% 63% +10
Having financial security in the event of a premature death 51% 59% +8
Having to provide for own/spouse’s long-term care needs 49% 57% +8
Finding a trusted source to provide financial advice 24% 33% +9
58
The typical caregiver is a woman in her late 40s who works outside the home and
provides unpaid care to her mother for more than 20 hours per week.* As such,
women are more likely than men to own long-term care insurance (54% vs. 45%),
yet less likely think they will need long-term care services in the future (36% vs. 25%).
LONG-TERM CARE ATTITUDES AND EXPERIENCE—MEN VS. WOMEN

Women Men
Knows someone who provided daily care 51% 43%
Caregiving has significantly impacted attendance at work 21% 20%
Owns long-term care insurance 54% 45%
Doesn’t have a plan/doesn’t expect to need long-term care services 36% 25%
*Source: “AARP: Valuing the Invaluable: The Economic Value of Family Caregiving, 2008 Update.”
59
Ownership of Long-Term Care Insurance Among U.S. Workers Has Not
Kept Pace With Increases in Concern and Need; Access to Coverage
and Misperceptions About Cost of Care Are Barriers
Despite concern about future long-term care needs, workers are not signing up for
group long-term care insurance in great numbers. While 53%, on average, are highly
concerned about providing for their/their spouse’s future long-term care needs, only
8% say they currently participate in a group long-term care plan when one is available
through their employer. Moreover, just 5% have purchased long-term care insurance
outside the workplace.
■ However, among those who are most concerned about future long-term care
expenses, 38% have enrolled in the group long-term plan made available by
their employer — much higher than average.
The number of plan sponsors making long-term care insurance available to their
employees has been flat and is not likely to grow soon. Today, roughly four in ten (39%)
plan sponsors with at least 50 employees say they offer long-term care insurance as
a voluntary benefit, with larger firms (1,000+ employees) more likely to offer it.
■ Most plan sponsors offering long-term care insurance plan to continue offering
it next year. But only one in ten plan sponsors who are who are not currently
offering long-term care insurance expect to introduce a new long-term care
program in the next year or so.
■ Brokers and consultants believe that long-term care insurance is a highly

specialized benefit. Consequently, only about half of brokers and consultants
(52%) surveyed say they sell and/or service group long-term care insurance.
60
PLAN SPONSOR MARKET FOR GROUP LONG-TERM CARE INSURANCE
39%
Currently Offers
Long-Term Care
Insurance
51%
Not Offering or
Planning to Offer
10%
Plans to Offer
Long-Term Care
Insurance in
the Next Year
61
More Education Is Needed to Help Workers Understand the Importance
of Planning Ahead to Meet Their Future Long-Term Care Needs
The average cost of care in a nursing facility in 2008 was approximately $70,000
per year according to the Prudential-sponsored 2008 Long-Term Care Cost Study.
Additionally, care provided to those age 50 or older cost caregivers an average of
$5,531 in out-of-pocket expenses. The amount increased to over $8,000 when the
caregiver lived a long distance from the person receiving care.*
According to U.S. government statistics, about 60% of Americans who reach age 65
will require some form of extended care in their lifetime. And the likelihood increases
with age — by age 85, chances of living in a nursing home are one in four, with an
average stay of about two and a half years. Despite the fact that many U.S. workers
will eventually need some form of long-term care, almost one-third say they either
do not expect to require care for an extended period or they simply do not have
a plan for funding their future long-term care needs.
The impact of market volatility on retirement savings can further erode the dollars
available to fund long-term care should the need arise. The recent downturn in the
financial markets certainly underscores the risk of planning to use retirement or other
personal savings to pay for future long-term care needs. Yet, nearly half of workers
surveyed expect to use their 401(k) or other retirement savings as the means of paying
for any future extended care services; another one-third plan to tap personal savings.
Another misperception is the role of Medicare in funding long-term care expenses.

More than a third of those surveyed believe that Medicare will pay for their extended
care expenses, but they don’t realize that Medicare only covers a small percentage
of all long-term care costs and excludes most custodial care services.
*Source: “AARP: Valuing the Invaluable: The Economic Value of Family Caregiving, 2008 Update.”
62
About one in four workers (23%) plan to use long-term care insurance to cover
their own and/or their spouse’s future long-term care expenses. Those who are
more likely than others to mention long-term care insurance as a source of funding:
■ Have direct or indirect experience with caregiving (28%) vs.

those with no experience (17%)
■ Work for larger companies (i.e., more than 25,000 employees)
■ Work in financial services/insurance and professional services industries
■ Currently receive long-term care insurance through their employer
■ Are more concerned than others with having sufficient retirement income
While some workers seem to understand the value of long-term care insurance,
most have misperceptions about the actual cost of care and their chances of
needing care for an extended period.
PLAN FOR FUNDING LONG-TERM CARE NEEDS OF SELF AND/OR SPOUSE

No Caregiving Caregiving
Total Experience Experience Difference
401(k)/retirement savings 47% 47% 47% 0
Medicare 37% 32% 42% +10
Personal savings/assets 33% 31% 35% +4
Medicaid 23% 20% 26% +6
Long-term care insurance 23% 17% 28% +11
No plan/don’t expect to need
long-term care services 30% 32% 28% -4
63
Caregiving Impacts Workers’ Productivity and the Hidden Costs
to Plan Sponsors Can Be Substantial
When workers are managing care for a family member, employers often shoulder
the costs associated with absenteeism and lower productivity. Many of these costs
are unquantifiable; however, a recent study by CCH* reported that the cost to the
nation’s largest employers (i.e., Fortune 500 companies) of unscheduled absences
is approximately $760,000 per year in direct payroll costs and even more when
factoring in lower productivity, lost revenue, and the effects of decreased morale.
In addition, two-thirds of the absences reported are for reasons other than an
employee illness, including caring for a relative or friend.
POTENTIAL IMPACT OF CAREGIVING ON THE WORK FORCE

Number of full-time Estimated number Estimated number of workers whose
U.S. workers of workers who have attendance/performance at work
age 20+** provided care (17%) has been affected by caregiving
x 17% x 20%
118 Million 20 Million 4 Million
Taking a family member to a doctor’s appointment or managing his or her condition

in the middle of the night can take a toll on plan participants and eventually on their
performance. Among workers who have (or their spouse has) provided care, one in
five say the caregiving responsibilities has negatively affected their attendance and
performance at work.
In addition, caregivers spend time traveling to and from the family member’s home
to provide care. Among those who have provided care, about half the time (47%)
care was provided in their own homes, while an equal proportion say they provided
care at the home of the care recipient (6% say some other location).
*Source: “CCH Unscheduled Absence Survey.”

**Source: 2008 Bureau of Labor Statistics data.
64
SELF-REPORTED IMPACT OF CAREGIVING ON WORK ATTENDANCE/PERFORMANCE
PERCENTAGE OF PLAN PARTICIPANTS WHO HAVE PROVIDED DAILY CARE FOR AN EXTENDED PERIOD
Great Deal 20% 20%

Moderate
21% 16%
Little/None
64%
59%
Impact on Impact on
Attendance Performance
Some plan sponsors are making the connection between plan participant
health/well-being and productivity. Companies focused on health, wellness,
and productivity are more likely to offer long-term care insurance.
■ Plan sponsors who offer long-term care insurance are more likely
to say “attempting to control the health of the work force”
is an important objective to them.
■ They are also more likely to be “providing accommodations

to assist employees in returning to work.”
65
66
Summary of Key Findings
The themes uncovered in Prudential’s

Study of Employee Benefits:
2009 & Beyond provide valuable
insight into the evolving trends shaping
the employee benefits landscape.
By providing a look into the future, this research can assist plan sponsors,
brokers/consultants, third-party administrators, and other key stakeholders
in developing their strategic business plans.
67
Summary of Key Findings
Theme 1: A New Day in Employee Benefits —

Plan Sponsors Change Priorities
Surviving During the Economic Downturn Is Now Employers’ Main Concern
Leading economic indicators drive significant changes to the way organizations

conduct day-to-day business, as well as how they manage benefits.
For the last two years, about two-thirds of plan sponsors reported benefits
budget increases over the past year. In 2009, less than half of plan sponsors
say their budgets increased from 2008. Many plan sponsors reported flat or
declining budgets.
Strategic initiatives that were the focus in the past few years (e.g., increasing employee
education and advice) are now taking a backseat to cost-cutting measures.
Both plan sponsors and brokers/consultants expect their companies to be in

a better financial position one year from now. But most plan sponsors are less
positive about the short-term prospects for their benefits staffing levels and
benefits budgets. Companies see benefits cost-management as a longer-lasting
reality and, perhaps, a necessary concession on the road to recovery.
68
Theme 2: Back to Basics —
Workers Shift Focus to Short-Term Financial Goals
Protecting Income and Assets in the Event of the Unexpected Is of Greater Importance
to U.S. Workers in 2009
The recession has taken its toll on the financial security of U.S. workers; about
three in five say they have been negatively affected by recent economic conditions.
“Job security” and “making ends meet” are workers’ top financial concerns
in 2009, ranking slightly above “having appropriate health insurance coverage,”
the perennial top financial concern of workers.
Research shows that most personal and financial needs and concerns have
increased in importance among plan participants in the past few years; however,
the importance of “saving for retirement” among workers has declined over
the past three years, with a steep drop in 2009.
Workers are increasingly recognizing the importance of financially protecting

themselves and their families from the unexpected, such as the sudden loss
of income or the need for extended care.
69
Theme 3: Expertise Is Essential —
Turbulent Times Call for Expert Advice
Plan Sponsors’ Need for Benefits Advice and Guidance From Brokers/Consultants
Has Never Been Greater
The importance of a sound employee benefits strategy that aligns with broader
business and financial goals has been underscored by recent market developments.
Plan sponsors that take a more strategic approach to employee benefits place greater
value on advice and support from brokers/consultants.
Benefits brokers/consultants can play a critical role, especially during this difficult
economic period, in helping plan sponsors develop comprehensive benefits strategies
that meet their companies’ primary need — maintaining a reasonably competitive
benefits program while identifying opportunities for greater efficiency and
cost savings.
Overall, brokers/consultants and plan sponsors are on the same page regarding
benefits philosophy and priorities. There is less agreement about which strategies
best achieve clients’ benefits objectives.
Looking ahead, both brokers/consultants and plan sponsors agree that plan design
changes and cost-sharing will continue to be among the most common approaches
for controlling benefits costs. The use of brokers/consultants will likely increase over
the next five years as plan sponsors seek further assistance with managing costs
while trying to maintain the competitiveness of their overall benefits package.
70
Theme 4: Show Them the Value —
What Is Said Is as Important as How It’s Said
Helping Workers Understand and Appreciate the Value of Their Employee Benefits Is Vital
Plan sponsors strive to keep their benefits packages competitive to boost recruitment
and retention. Likewise, benefits brokers and consultants recognize that offering a
competitive benefits program helps clients achieve their staffing goals.
In 2009, more workers believe that their employers are cutting back on benefits.
This trend in perceived benefits reductions has negatively impacted plan participant
attitudes toward the value of benefits.
A well-executed communication strategy can effectively educate plan participants and

positively influence attitudes toward their benefits package. Our research indicates
a clear linkage between the effectiveness of employee communications and the
perceived value of benefits. Interestingly, communications can have as much impact
on worker satisfaction with benefits as the range of benefits offered or the perceived
dollar amount of employer contributions.
Enhancing employee communications can be a cost-effective way for plan sponsors

to increase the perceived value of their benefits programs. Delivering the right
benefits messages to the right employees is essential to getting their attention
and keeping them engaged.
Using the right communication methods is also critical. Employees who rate
their benefits communications as highly effective report a higher rate of receiving
communications through a variety of channels from group meetings to e-mails
to videos.
Employers could look for communication and education support from brokers and
consultants. Not only do brokers and consultants view communication and education
as being more important in the future, they also anticipate playing a greater role in
these areas.
71
Theme 5: Long-Term Care Insurance —
A Pillar of Retirement Planning
Workers Are Becoming More Aware of the Need for Long-Term Care Services,
but Further Education and Planning Are Required
Long-term care needs and concerns are growing in importance among plan
participants as the Baby Boomer generation approaches retirement and more
plan participants gain an understanding of the benefits of having long-term
care insurance.
Most plan participants need to be educated about how to meet long-term care
needs. When plan participants are asked how they plan to fund their own and/or
their spouse’s long-term care expenses, three in ten plan participants say they
don’t have a plan or don’t expect to need long-term care services.
Only a small number of employees are informed about the benefits and advantages
of long-term care insurance. About one-quarter of plan participants say they will
use long-term care insurance as a source to fund their own and/or their spouse’s
long-term care expenses.
In general, those with long-term care experiences place a higher value on long-term
care insurance, employee benefits, and voluntary benefits. They are more likely to
say that offering voluntary benefits highly increases the value of their company’s
benefits to them.
While a growing number of plan participants are realizing the importance of

long-term care needs, they seem to lack access to long-term care insurance,
which may carry hidden costs to plan sponsors. When a plan participant is
managing the long-term care for a family member, the plan sponsor often
ends up shouldering costs associated with lowered productivity and time
away from work.
72
About Prudential
Prudential Financial, Inc. (NYSE: PRU), a financial services leader with approximately
$580 billion assets under management as of June 30, 2009, has operations in the
United States, Asia, Europe, and Latin America. Leveraging its heritage of life insurance
and asset management expertise, Prudential is focused on helping approximately
50 million individual and institutional customers grow and protect their wealth.
The company’s well-known Rock symbol is an icon of strength, stability, expertise,
and innovation that has stood the test of time. Prudential’s businesses offer a variety
of products and services, including life insurance, annuities, retirement-related services,
mutual funds, investment management, and real estate services.
About Prudential’s Group Insurance Business Unit

Prudential’s Group Insurance segment manufactures and distributes a full range of
group life, long-term and short-term group disability, long-term care, and corporate
and trust-owned life insurance in the United States to institutional clients primarily
for use in connection with employee and membership benefits plans. Group Insurance
also sells accidental death and dismemberment and other ancillary coverages and
provides plan administrative services in connection with its insurance coverages.
73
©2009. The Prudential Insurance Company of America, 751 Broad Street, Newark, NJ 07102-3777. All rights reserved. Prudential and the Rock logo
are registered service marks of The Prudential Insurance Company of America, Newark, NJ. www.prudential.com
0160082-00002-00 111269

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PRUDENTIAL’S GROUP INSURANCE

The Prudential Insurance Company of America

A New Day in Employee Benefits — Plan Sponsors Change Priorities 8

Back to Basics — Workers Shift Focus to Short-Term Financial Goals 20

Expertise Is Essential —Turbulent Times Call for Expert Advice 28

Long-Term Care Insurance — A Pillar of Retirement Planning 54

Summary of Key Findings 67

Five Key Themes From This Research

Overview of Plan Sponsor Survey

Below is a breakdown of survey respondents by survey participant region, job function,

Region Job Function Industry

2008 Sales or Fee Income Years in Business Business Ownership

Under $10 million 17% Fewer than 10 13% Private 79%

Overview of Plan Participant Survey

Below is a breakdown of survey respondents by age, region, household income, gender,

Age Region Household Income

Gender Education Employer Size

Participants include brokers/consultants who meet the following qualifications:

We categorized participants based on the size of clients they predominantly serve:

Below is a breakdown of survey respondents by region, years in the business, age,

Under 25 1% Male 46%

SIZE OF BROKER/CONSULTANT FIRMS BY NUMBER OF EMPLOYEES

<500 500–4,999 5,000–9,999 10,000+

Top Employer Industries

Note: Benefits brokers/consultants were asked to indicate the three industries

Average Size of Clients Served

Small Market —Employers with fewer than 100 employees

32% Large Market —Employers with 1,000 or more employees

This report examines some of the most

Leading Economic Indicators Drive Significant Changes to the Way

IMPACT OF RECENT ECONOMIC CONDITIONS ON BUSINESS

Very Negative Somewhat Negative Neutral Positive

Plan Sponsors 29% 39% 19% 13%

Brokers/Consultants 12% 41% 20% 27%

CHANGE IN BENEFITS BUDGET PER EMPLOYEE

Budget 2008 Actual 2009 Actual

IMPACT OF RECENT ECONOMIC CONDITIONS ON CLIENTS’ EMPLOYEE BENEFITS BUDGETS

Impact Total Small Market Mid Market Large Market

IMPACT OF RECENT ECONOMIC CONDITIONS ON PROJECTED BENEFITS DEPARTMENT STAFFING

EMPLOYEE BENEFITS STAFFING PROJECTIONS FOR 2014

Total 50–99 100–499 500–999 1,000–4,999 5,000–9,999 10,000+

IMPORTANCE OF EMPLOYEE BENEFITS OBJECTIVES

2009 Projection Change

LINKAGE OF BENEFITS STRATEGY AND BUSINESS/FINANCIAL GOALS

2007 2007 Projection 2009 2007 Projection

■ Those positively affected by the economic downturn have remained focused

IMPORTANCE OF BENEFITS OBJECTIVES BY IMPACT OF ECONOMY

Impact of Economy on Companies

Interestingly, brokers and consultants will recommend all cost-management strategies

■ Plan sponsors who are more optimistic about their companies’

PROJECTED FINANCIAL HEALTH OF THEIR BUSINESS IN 2010

About the Same 30%

Area of significant difference

■ Workers most negatively affected by the recession include:

IMPACT OF RECENT ECONOMIC CONDITIONS ON PERSONAL FINANCIAL SITUATION

Very Negative Somewhat Negative Neutral Positive

Plan Participants 23% 34% 26% 17%

*Source: 2008 Bureau of Labor Statistics data.

■ Workers most optimistic about their financial well-being in 2010 include:

Impact of Economic Conditions

IMPORTANCE OF PERSONAL AND FINANCIAL NEEDS AND CONCERNS

■ Those most negatively affected by the recent economic conditions are