At first glance, an HR Manager may think, "yes, that's what we need" and in many instances, would be correct, but for Employee Benefit Statements my response is; "Not so fast. Let's give this a little thought."
Although a benefit statement may have an 'as of date', it usually is referencing a time period and that period is typically One Year. The question becomes, should you look one year back (Historic) or one year forward (Forecast)? It can make a significant difference in the numbers and in the value it provides for employees. Getting Calendar year values may be difficult, but retrieving rolling year numbers may be close to impossible.
Look back (Historic statement)
- If for the previous Calendar year, are you able to gather Aggregates (sums) on all the relevant data for the identical time frame?
- Will you actually be able to extract valid data for summary Employer contributions for those items where employee wage bumps will affect the dollar contributions? (employer life or LTD, as an example).
- Have you thought about the impact on the 'number's for employees that were hired during that calendar year?
- Do you have a way of determining eligibility dates for each benefit for same year hires?
- Have you determined a reasonable cut-off date for late year hires? What was your rationale?
- How will you explain the 'low numbers' to these hires?
- How will you explain the use of 'old' data, particularly for those that have received significant pay increases. After all, some of the data my be more than one year old. Will that help to inspire loyalty?
- How will you handle Plan years that do not coincide with Calendar? This is common, particularly with Defined Benefit Plans.
- How will you handle data and explanations for employees that have switched from Hourly to Salaried or vice versa?
Next time; thinking through the challenges associated with a Projected Statement.