Prudential Report Finds Tough Economic Conditions Driving Employers to Implement Targeted Voluntary Benefits Communication Programs

"Clearly, it's just not enough to have a robust benefits offering in today's economic climate. How well you communicate the value of your program often matters more than the richness of your program," said Lori High, president of The Prudential Insurance Company of America's Group Insurance business. "And when it comes to navigating an increasingly diverse and multigenerational work force, 'targeted and personalized' are the new hallmarks of benefits communications."

The study results highlight the increasing influence of an aging and multigenerational work force on benefits programs. Today, only 21% of plan sponsors cite a multigenerational work force as highly important, and 27% cite an aging work force as highly important. However, the perceived importance of a multigenerational work force nearly doubles in five years among plan sponsors. According to High, "Employers should pay close attention to the preferential differences between multigenerational employees, and not make assumptions. Even we were intrigued to find that the Baby Boomer generation's preference for online benefits presentations is stronger than that of the tech-savvy Millennial generation."

Prudential's Study of Employee Benefits: 2008 and Beyond provides valuable insight that plan sponsors, brokers/consultants, third-party administrators, and other key stakeholders can use to support their business planning and strategy development. Additional trends shaping the employee benefits landscape include:

-- Plan sponsors offer voluntary benefits more so for employee retention and satisfaction, rather than for cost savings. Roughly two in five companies offering voluntary benefits "strongly agree" that these programs have had a positive impact on employee satisfaction with their benefits programs overall. Nearly half (46%) of employers agree that offering voluntary benefits has helped to lower overall benefits costs, while 22% "strongly agree" that any cost savings have resulted. The struggle of employers to see anticipated cost savings, despite their substantial increased usage of benefits web tools. Nearly one-third of plan sponsors (30%) say their web technology budget increased in the past year, while nearly 60% say it remained steady. Only 2% reported a decrease in spending. This trend is expected to continue in the next five years, with half of employers anticipating a budget increase. While gaps exist between the importance of benefits web technology objectives and actual performance in many areas, the greatest unmet expectation is the reduction of benefits administration costs. Sixty-four percent of employers believe reducing benefits administration costs to be "highly important", while only 23% felt their needs in this area were "completely or mostly met". Employers' use of comprehensive absence tracking systems to manage workforce productivity. While many companies track basic absences, only about 3 in 10 report doing "a great deal" with respect to implementing a process that will improve workforce productivity. Among plan sponsors who are active in absence tracking, 4 in 10 feel that those efforts have been "highly effective". Employers expect to increase their absence management and return-to-work activities by almost 50% over the next five years. The critical link between employers' benefits strategies and their business plans/financial goals. Companies have different philosophies and priorities with respect to employee benefits. Their approaches can be categorized into four distinct segments: High-Value segment: This segment reports a strong strategic link between company goals and benefits decision-making. On-Par segment: This segment's strategic focus is on employees, but cost plays a role. Price-Sensitive segment: Driven by price, this segment reports very little linkage between benefits and company strategy. Price-Paramount segment: This segment is almost exclusively focused on price; their top objective is cost-sharing.

"Our findings remind us to make no assumptions when it comes to employee benefits," said High. "Rather, we should keep a close watch on emerging trends to make sure we are offering the benefits employees need via the communication vehicles that prompt action, while helping employers link their benefits plans to their financial goals."

Prudential Financial's Study of Employee Benefits: 2008 and Beyond report was fielded via the Internet during May 2008 and consists of two distinct surveys: one among benefits plan sponsors and the other

among benefits plan participants. The surveys were conducted for Prudential by the Center for Strategy Research, Inc., a Boston-based, independent, market research firm. For a copy of the Study of Employee Benefits: 2008 and Beyond report, visit www.prudential.com/gi/.

Prudential's Group Insurance business 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 U.S. 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.

Prudential Financial, Inc. (NYSE: PRU), a financial services leader with approximately $638 billion of assets under management as of June 30, 2008, 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. For more information, please visit http://www.news.prudential.com/.

Group Insurance issued by The Prudential Insurance Company of America, Newark, NJ.

Prudential and The Rock logo are registered service marks of The Prudential Insurance Company of America.

IFS-A155026 Ed. 9/08

SOURCE: Prudential Financial, Inc.

Prudential Financial, Inc. Sheila Bridgeforth, 973-802-6852 sheila.bridgeforth@prudential.com