Navigating the Future: What Principal Financial Employees Should Know About Potential Benefit Changes

According to Principal Financials' 2022 Well-Being Index, 65% of businesses surveyed anticipate a recession in the next six months, and 63% report having already been negatively impacted by inflation and want to cut costs such as employee benefits. As a Principal Financial employee, it is imperative to account for this information and plan ahead as to ensure the welfare of you and your family.

benefitshttps://secure02.principal.com/publicvsupply/GetFile?fm=EE12520&ty=VOP

Why?

As a potential recession looms, increase in job changes, additional training, inflation, and an older workforce has forced employers to cut health and maternity leave benefits. If you are a Principal Financial employee dependent on these benefits, it is essential to account for this transition and adjust your spending accordingly.

One method employers use to quickly reduce costs is reducing these benefits back to FMLA requirements of about 12 weeks rather than offering more than the requirement.

U.S. employers expect health benefit costs per employee to rise 5.6% on average in 2023, according to early results from Mercer’s National Survey of Employer-Sponsored Health Plans 2022 released Aug. 10. According to MarketWatch, the average couple retiring at age 65 can expect to spend $300,000 on health care in retirement, which does not include long-term care needs. As a Principal Financial employee planning to retire, you may want to consider these values and determine if it is a good idea to start saving more money to supplement your future medical bills.

https://www.marketwatch.com/story/vanguard-reverses-decision-to-cut-retiree-medical-benefit-after-employee-outcry-11633632066

“So, the expectation is that health care costs will accelerate in the coming years regardless of what happens to inflation,” he says. Mercer’s research also found that employers were not looking to put the brunt of rising health care costs on employees, such as raising deductibles or copays. Just 36% of survey respondents are making cost-cutting changes in 2023, down from 40% in 2022 and 47% in 2021.

So, who is cutting benefits?

Some Principal Financial companies are cutting benefits such as life insurance and death benefits. Principal Financial employees feel their former employer is reneging on a promise made when they were hired 20-30 years earlier. As many find that these cuts don't apply to top executives, who have life insurance under a separate company-paid program, which the company can't reduce without their permission.

These companies state that the cuts for other retirees will bring their benefits more in line with the benefits at other large employers, and that only a handful of Fortune 100 companies still offer most employees life insurance that continues after retirement. If you are a Principal Financial employee, you may want to consider planning in accordance to these cuts as to not be taken by surprise in the event they are implemented at your workspace.

https://www.wsj.com/articles/at-t-slashed-promised-life-insurance-for-former-workersand-time-runs-out-at-year-end-11640544022?st=a8293xazk6a3cb0&reflink=desktopwebshare_permalink

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Can Principal Financial legally cut benefits

As we mentioned in prior articles the Allstate case discusses companies' options with respect to terminating benefits.

In the early 1980s, Allstate distributed booklets to employees that described the retiree life insurance benefit as being provided at 'no cost.' Starting in 1990, Allstate distributed summary plan descriptions (SPDs) that, unlike the earlier booklets, reserved 'the right to change, amend or terminate the plan or the provisions of the plan at any time.'

The US 11th Circuit Court of Appeals ruled in Klass v. Allstate Insurance Co. that Allstate did not violate the Employee Retirement Income Security Act (ERISA) when it terminated retiree life insurance benefits. After this ruling we saw other companies pursue terminating retiree life insurance benefits. https://law.justia.com/cases/federal/appellate-courts/ca11/20-14104/20-14104-2021-12-28.html

https://www.govinfo.gov/app/details/USCOURTS-ca11-20-14104

Can Retiree Health Benefits Provided by Principal Financial Be Cut?

For employees and retirees who work or worked at Principal Financial that provide post-employment health care benefits, an important question to ask is under what circumstances can the company reduce or terminate these benefits.

Principal Financial employees and retirees should know that private-sector employers are not required to promise retiree health benefits. Furthermore, when employers do offer retiree health benefits, nothing in federal law prevents them from cutting or eliminating those benefits—unless they have made a specific promise to maintain the benefits. The key to understanding your Principal Financial retiree health benefits lies in the documents governing your plan.

https://robertsdisability.com/eleventh-circuit-affirms-allstate-retirees-are-not-entitled-to-lifetime-life-insurance-benefits/

Prudential Freeze on Retiree Benefits Left Some Feeling 'Betrayed'

In 2022 Prudential Financial will stop contributing to retirement medical savings accounts for current, according to a letter sent to employees in December. In addition, Prudential retirees must now use all the money accrued in the accounts over 20 years, rather than over their lifetime, and any remaining balance reverts back to Prudential life. https://www.inquirer.com/business/prudential-financial-retiree-medical-savings-accounts-healthcare-costs-20211215.html

How does Principal Financial Group, Inc. ensure the proper calculation of benefits under both the traditional benefit formula and the cash balance formula, and what processes are in place to determine which benefit is more valuable at the time of retirement?

Proper calculation of benefits under both traditional and cash balance formulas: Principal Financial Group, Inc. compares the benefits under both the traditional and cash balance formulas to determine which provides a higher value at retirement. If the cash balance formula provides more value, employees may opt for a lump-sum distribution. For the traditional benefit formula, an annuity is provided. Federal law prevents employees from selecting the less valuable benefit(Principal Financial Gro…).

In what ways does Principal Financial Group, Inc. address the complexities involved in pension plan contributions, especially pertaining to different categories of eligible employees, and how does this affect an employee's retirement benefits?

Complexities in pension plan contributions for different employee categories: Contributions under the pension plan are determined by the points formula based on age and service, as well as compensation over the Social Security Taxable Wage Base (SSTWB). Different formulas apply depending on whether the employee is a grandfathered participant, which affects the overall retirement benefit(Principal Financial Gro…).

What are the specific options available for choosing a payment method for retirement benefits at Principal Financial Group, Inc., and how do these options accommodate various personal financial situations and goals?

Payment method options for retirement benefits: Employees can choose from several payment methods, including a life annuity, survivorship annuities, and lump-sum payments (for cash balance plans). The selected option must meet federal distribution laws, and the spouse’s consent is required if a survivorship annuity is waived. This allows for flexible options to match individual financial needs(Principal Financial Gro…).

Considering that benefits under the Principal Financial Group, Inc. pension plan are insured by the Pension Benefit Guaranty Corporation (PBGC), what are the implications for employees regarding benefit security, particularly in the event of plan termination?

Pension Benefit Guaranty Corporation (PBGC) insurance implications: Benefits under Principal Financial Group's pension plan are insured by the PBGC, meaning that if the plan is terminated without sufficient funds, the PBGC steps in to pay benefits. This provides a level of security, but not all benefits may be fully covered depending on PBGC limitations(Principal Financial Gro…).

How does the plan for Principal Financial Group, Inc. handle benefits for employees who may leave the company before retirement age but still meet certain eligibility criteria, particularly regarding vesting and accrued benefits?

Benefits for employees who leave before retirement age: Employees who leave Principal Financial Group before reaching retirement age but meet vesting criteria retain their accrued benefits. Depending on age and service, these benefits may be deferred until the employee reaches retirement age(Principal Financial Gro…).

Can you explain the role of the Benefit Plans Administration Committee at Principal Financial Group, Inc. in managing the pension plan, and what responsibilities do they have to ensure compliance with legal regulations?

Role of the Benefit Plans Administration Committee: The Benefit Plans Administration Committee oversees the pension plan's administration and compliance with legal regulations. The committee has discretion in determining eligibility, interpreting provisions, and ensuring that the plan is managed according to ERISA and company policy(Principal Financial Gro…).

What procedures does Principal Financial Group, Inc. have in place to assist employees in understanding their rights under ERISA, and how can employees effectively advocate for their benefits if claims are denied?

Employee rights under ERISA: Principal Financial Group provides clear processes for employees to understand their ERISA rights, including obtaining information about plan benefits and appealing denied claims. Employees can advocate for their benefits by requesting necessary documents and following formal appeal processes if needed(Principal Financial Gro…).

How does Principal Financial Group, Inc. facilitate communication and support for employees transitioning into retirement, including access to resources and counseling about financial planning?

Communication and support for transitioning into retirement: Principal Financial Group offers resources such as access to summary plan descriptions, benefit counseling, and personalized support through the Participant Contact Center, ensuring employees have the guidance they need to navigate retirement planning(Principal Financial Gro…).

What steps should an employee at Principal Financial Group, Inc. take if they encounter difficulties with receiving their pension benefits or have questions about their eligibility or calculations involved in their retirement plan?

Procedures for difficulties with receiving pension benefits: Employees encountering issues with pension benefits or questions regarding eligibility can contact the Human Resources Service Center or the Participant Contact Center. Principal Financial Group has established a clear claims procedure, including timelines for appeals and responses to benefit inquiries(Principal Financial Gro…).

How can employees contact Principal Financial Group, Inc. to obtain more information about the retirement plan, and what resources are available for them to navigate their benefits effectively?

Contacting Principal Financial Group for retirement information: Employees can contact Principal Financial Group through the Participant Contact Center at 800-547-7754 or through the HR intranet. Comprehensive resources, including plan summaries and individual account information, are made available to assist in navigating benefits(Principal Financial Gro…).