Actuarial, Retirement and Benefits Strategies
Window of opportunity
Traditional retirement and benefit programs can be a huge drag on business performance. Yet many companies have had little latitude to make meaningful changes. The economic crisis and the emergence of health care reform legislation, has scaled back employee expectations – and set a precedent for companies to rethink programs that have long outlived their usefulness.
Transforming a company’s benefits and retirement programs requires deep experience with benefits plans and a solid grounding in actuarial science. But that’s just the beginning. In many cases, the only way to see past the status quo is through a strong financial perspective. Deloitte has access to deep experience in human resource (HR), finance and actuarial services to help organizations identify opportunities and solutions others might miss. As a leader in organizational change consulting, we help organizations turn innovative ideas into reality. Learn more about the offering.
2013 Study of Economic Assumtpions
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Annual 401(k) benchmarking survey (2012 edition)
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2013 top five global employer rewards priorities survey
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Cost transparency: How retirement providers are transforming their business
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2010 Top Five Total Rewards Priorities survey
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Don’t throw baby boomers out with the bath water
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Meet our people
- David Lusk, Principal, Deloitte Consulting LLP
- David Hilko, Director, Deloitte Consulting LLP
- Health actuarial services
- Health care clinical information systems
- Advanced analytics
- Benefits administration and operations
- Employer health reform
Learn more about the offering
A critical moment for action
Health care reform is now the law of the land, creating profound changes in how medical benefits are delivered to employees and retirees and impacting workforce planning especially in industries that rely on part-time workers.
Most benefits programs were designed for a different era when people stayed with the same company for their entire careers, expected full healthcare and benefits, and looked forward to a quiet retirement. But in today’s business world – where people hop from one company to the next and then retire early – that model of lifelong obligations just doesn’t make sense. Moreover, many programs waste money on benefits that large segments of the workforce don’t really care about. Factor in the skyrocketing cost of healthcare, and it’s clear that something needs to change.
Businesses now have an opportunity to rethink their benefits programs and design new ones that are more attractive to their employees, with more manageable and predictable costs as well.
How we can help
Transforming a company’s benefits and retirement programs requires deep experience with benefits plans and a solid grounding in actuarial science. But that’s just the beginning. In many cases, the only way to see past the status quo is through a strong financial perspective. Deloitte has access to deep experience in HR, finance and actuarial services to help organizations identify opportunities and solutions others might miss. As a leader in organizational change consulting, we help organizations turn innovative ideas into reality. Our services are designed to help organizations in the following areas:
- Redesign of overall benefits packages
- Health care strategy development including consumerism and wellness considerations and the proper reaction to health care reform
- Transition of pension plans into defined contribution plans
- Employer cost reduction studies
- Evaluation of benefit plan value to employees
- Communication of employee benefits programs
Effective actuarial, retirement and benefits strategies can help an organization in its efforts to:
- Make benefits and retirement costs more manageable and predictable
- Reduce costs for the business
- Provide benefits that today’s employees value
- Reduce legacy obligations that make it hard for a business to remain competitive
Five ways to get more value now
Through our work with companies around the world, we have developed insights that we believe can help organizations in their efforts to get more value from their actuarial, retirement and benefits strategies. Consider these lessons learned:
Clarify the objective. Most companies want to reduce cost and cost volatility. But understanding that objective is not as simple as it sounds. Are you looking for immediate cash savings, or reduced expenses on financial statements? Are you willing to invest in the short term to meet your long-term goals, or do need to achieve net savings in the first year? What trade-offs are you willing to make to reduce costs versus keeping employees happy?
Start with critical workforce segments. Benefits programs should reflect the special needs of workforce segments that drive the organization’s performance.
Focus on what today’s workers want. Many programs waste money on benefits that workers no longer value. Often, different generations of workers have different priorities. Focusing on the needs of the present and future workforce – instead of dwelling on the past – can boost attraction and retention while reducing costs.
Make communication an early priority. When designing or modifying benefits programs, many companies make the mistake of treating communication as an afterthought. Building consensus around key messages – before employees find out what is going on – will make it easier for them to understand and accept the changes.
Monitor and adjust. Continuously monitor program effectiveness both in terms of financial effectiveness and employee satisfaction. Adjust programs annually as needed. Too many companies make changes without ever reviewing the impact.
Actuarial, Retirement and Benefits Strategies in action
- We helped a major clothing manufacturer design and implement full-replacement consumer-driven healthcare plans. We also assisted with vendor selection and are helping to establish an on-site clinic along with face-to-face health and wellness coaching at the company’s largest facilities. We were able to reduce current health care costs by 8-10 percent and reduce the future increases to health care costs by an additional 1-2 percent per year over the next five years.
- A Fortune 100 company wanted to transform how it managed health care benefits. We used advanced analytics to streamline its plan offerings, reducing administration costs by 12 percent. We also redesigned the company’s prescription drug programs to shift usage to lower-cost treatments, saving 6-15 percent for various drug categories. The project has established a sustainable trend to reduce overall costs by an additional 4 percent every year.
- We assisted a large federal agency in improving how they managed their retirement plan costs. The analysis included recommendations on controlling costs through the development of a better governance system, policy changes and plan/program changes. The results of our work allowed the federal agency to redirect $700M into job creation and preservation in FY 2010 and FY 2011.
As used in this document, “Deloitte” means Deloitte Consulting LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries.