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‘Golden handcuffs’ increasingly popular option for employers

Many employers facing a manpower and skills shortage are opting for “golden handcuffs.”

It’s a win-win compromise for employers and employees, where incentives over and above the typical perks are offered, especially to key personnel, to maintain a happy and loyal workforce. Insurance agents reap the rewards of marketing a target audience with an employer’s blessing and earning commissions on products sold through the company.

“The term ‘golden handcuffs’ almost connotates employers locking in employees when it actually provides a significant benefit for them,” said Pat Vivier, CLU, CHFC, AEP, and owner of Pat Vivier Financial Group in Jackson.

Susan Williams, vice president of Country Originals in Jackson, said, “It’s an odd name, but it fits.”

“I’m glad something like that was available,” she said.

“Golden handcuffs” is not a new concept, but it has become more popular in the last several years as the economy has tightened and the number of layoffs has increased. Factor in employee turnover — the average employee length is three years — and employers have realized that offering supplemental benefits is becoming increasingly important.

“Only about 15% of employers in the South have presented the ‘golden handcuff’ theory,” said Michael Crews, LUTCF, a Shelter Insurance agent in Brandon. “There’s such potential for employers, employees and insurance agents.”

Allison Crews, LUTCF, president of Grogan & Crews Inc. in Canton, said almost every employer she’s met with lately has asked about the industry trend.

“Everybody’s looking for solutions,” she said. “‘Golden handcuffs’ is one of them.”

SERP (supplemental executive retirement plans), which allows employers to offer key personnel increased retirement income benefits without a change in current compensation, falls under the “golden handcuffs” umbrella.

Williams, who signed up for SERP, called it “a beautiful plan for privately held companies.”

“It helps us with our retirement and helps defray taxes,” she said.

It can also be used to entice top-level managers.

“Instead of paying a key executive $100,000 per year, the company might pay him $90,000 with a $10,000 bonus to convert into a deferred compensation plan,” said Michael Crews. “The employee knows he’s getting his money back at retirement.”

“Golden handcuffs” can extend to the family of employees by offering multiple insurance products at a discount through payroll deduction. Also called “lunch bag selling,” insurance agents generally make a presentation to employees on company time, process the applications and work with the company’s human resources department to administer the program.

“The companies we use are very professional,” said Allison Crews. “Their representatives don’t take up much company time, yet adequately explain programs, which is very important because each has its pros and cons.”

Country Originals, importers of home accessories and furnishing for wholesale distribution to retailers across the country, offered its 42 employees supplemental policies to buy down healthcare deductibles after the company was forced to raise theirs.

“After our insurance rates went up 45% in two years, we had to put the brakes on,” said Williams. “The beauty of it is the company doesn’t have to do the supplemental policies as a group. Some people didn’t care that the deductible was raised and others did.”

Supplemental policies and plans are diverse and comprehensive: cancer policies, life insurance plans on a discounted rate basis, short- and long-term disability policies, college planning programs, medical savings accounts, checking/savings accounts and even auto insurance coverage. Pre-paid legal plans are very popular.

“It’s typically not difficult to introduce ancillary products,” said Vivier. “It basically comes down to a slot in the company’s computer system for making the payroll deduction. The only resistance I’ve heard has been when slots weren’t available.”

Contact MBJ contributing writer Lynne W. Jeter at (800) 993-3392 or lwjeter@yahoo.com</a.

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