It's wise to size up your fringe benefits --especially if you're considering a new job
Fringe benefits are an important part of your total ``compensation package,'' as salary-plus-fringes is somewhat stodgily known. It's not always a fully quantified part of that package, though, and anyone doing comprehensive financial planning should take time to survey benefits.Skip to next paragraph
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Knowing just what you've got is especially important if you're considering going into business for yourself. ``It can be hard -- and expensive -- to reproduce those benefits,'' says Robert J. Martel, a certified financial planner in Lexington, Mass.
``People are surprised at how much their benefits cost when they try to reproduce them on the outside,'' echoes Wayne Chodkowski, president of Business & Wealth Advisors Inc., in Dunwoody, Ga. He says employers are required to give each of their employees a statement of corporate benefits every year. He then uses this statement as a point of departure in discussions with clients to find out just what is included in their benefits.
Isabel Smith, a certified financial planner in Birmingham, Mich., points out that not every fringe is a great bargain. ``It is sometimes a misconceived notion'' that additional life insurance obtained through your employer, for example, is necessarily cheaper than what you could obtain on your own.
Employers are sometimes in the dark as to what employees think of their benefits. ``Top management is surprised at what's needed,'' says Chodkowski. Sometimes the ones employers are proudest of are the ones employees couldn't care less about, and vice versa. Chodkowski suggests that if there's a benefit you'd like your employer to offer, it may not be a bad idea to talk up the idea among your colleagues and present some grass-roots input to the front office about the changes you would like to see.
What about vacation time? That certainly counts as an important fringe benefit. A Hewitt Associates survey of 250 employers found that two weeks off after a year's service is overwhelmingly the norm. ``Five years' service is the breakpoint for three weeks' vacation,'' says Mark A. Murray of Hewitt's Boston office. There is a slow but steady increase in vacation schedules. The percentage of employers offering four weeks after about 15 years' service is up from 81 percent in 1979 to 87 in 1984.
Some 55 percent of companies surveyed offered 11 paid holidays; as the country adds new holidays, some employers are offering a ``floating'' holiday, to be taken on one of a number of possible dates.
Although some companies do let employees carry unused vacation forward from one year to the next, Mr. Murray notes a trend away from this practice.
``For one thing, there's the cost factor,'' he says; ``presumably your salary goes up each year, so it will cost your company more to give you the vacation next year.
``And then some companies are philosophically opposed to letting people carry vacation forward: They want employees to take their break; they don't want them to burn out.''
Flexible compensation, or ``cafeteria benefits'' plans, which give employees a base salary and then allow them choose among a number of benefits, sometimes include a provision for ``banking'' some vacation time and turning it into another benefit, or converting it to cash.
As Washington wrestles with the federal budget deficit, it will likely scrutinize the revenue loss represented by the decision not to tax certain benefits. Accordingly, some companies are thinking twice -- or more -- about some of the benefits they offer. ``Companies are nervous. They're slowing down,'' says Joel F. Levy, partner at Coopers & Lybrand in New York.
The problem, he adds, is the fairness issue. Why should some people get certain benefits tax-free just because they work for a large organization?
Tuition reimbursement is a benefit that is very popular -- and critical to many employees. A Hewitt survey of 655 companies found that 619 offered some form of formal tuition reimbursement.
This benefit has also had a convoluted recent history with the IRS. The law allowing tuition reimbursement as a tax-free perk expired at the end of 1983, and was renewed -- retroactively -- at the end of last August. It's up again for reconsideration at the end of 1985, and is likely to be looked over carefully before it's renewed.
On the other hand, it's a popular program, and its advocates haven't thrown in the towel yet. ``When employers lobby and show how heavily used [tuition benefits] are,'' says Hewitt's Mr. Murray, ``it's seems they [members of Congress] are listening.''