Design is not just what it looks like and feels like. Design is how it works. - Steve Jobs
It’s doubtful that Steve Jobs was thinking about employee benefit programs when he made this statement. Yet, it’s as applicable to employee benefits as it is to technology. Good design is critical to achieving good outcomes.
A useful framework for benefit designs that produce good outcomes consists of the four B’s:
The tendency of many companies is to first and foremost look at budget. However, that is the one objective that is probably easiest to achieve (note that easy does not necessarily translate into pleasant). Companies can change employee contributions, retirement plan match rates or benefit levels to achieve their budget goal. Read more
Warren Buffett, the Oracle of Omaha, reiterated his view on a so-called “millionaires tax” in an op-ed piece in the New York Times on Sunday. If you’d like to read about what a billionaire thinks about what millionaires should do, it’s an interesting read.
Here’s a quick summary of his views:
First, in the not so distant past, marginal tax rates for upper income households and tax rates on capital gains and dividends were quite high and – guess what – the wealthy weren’t throwing their money under a mattress, they were investing. Second, the rich should pay their fair share in taxes. Buffett suggests that households with incomes above US$500,000 (not the US$250,000 that Obama has proposed) to return to the pre-Bush era tax rates. And he reiterated his “Buffet Rule,” which calls on Congress to develop a minimum tax for millionaires: 30% for income between US$1 million and US$10 million, and 35% for incomes over US$10 million. Finally, he is, of course, pushing for debt sustainability – moving revenues to 18.5% to GDP and spending to 21% of GDP. Buffet cites that the United States currently takes in 15.5% of GDP in revenue and spending is about 22.4% of GDP.