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Employer-sponsored life insurance plans take a hit

Posted On Fri, July 23, 2010

Even though employees are slogging away long hours at work, their retirement benefits are being reduced, an analysis performed by Towers Watson reveals.

Retirement benefits as a percentage of pay declined 19 percent between 1998 and 2008, according to the analysis. At their highest level during the reviewed time frame, retirement benefits went from 7.88 percent of a person's pay and fell to just 6.36 percent.

Cuts were seen in life insurance and retiree medical insurance plans, Towers Watson found.

Towers Watson senior retirement consultant Kevin Wagner says that the economic downturn pressured many companies to cut back and alter benefits.

"This past decade witnessed a significant shift in retirement plans, as many companies replaced their traditional DB plans with DC and other account-based retirement plans for new workers," said Wagner. "In the last few years, both the financial crisis and the Pension Protection Action of 2006 have been factors contributing to employers' careful examination of their retirement plan strategies."

Since many companies are decreasing the amount of benefits they are offering employees it may be best for people to seek out life insurance policies on their own.ADNFCR-2297-ID-19906233-ADNFCR

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