CEO Business Climate Survey 2011 - Silicon Valley Leadership Group

SILICON VALLEY
CEO
SURVEY
BUSINESS
CLIMATE
2011
Healthcare Reform
Pension Reform
SILICON VALLEY
CEO
SURVEY
BUSINESS
CLIMATE
2011
Healthcare Reform
Healthcare reform has gripped the nation for the past two years, leading to passage of the Patient Protection and Affordable
Care Act of 2010. Survey participants were asked about the new legislation. Those with opinions approved the new healthcare
law by a margin of about 3-to-2. More than one third of the respondents expressed no opinion, possibly because the law will not
be fully phased in until 2014.
Which of these statements is closest to your feelings about
the Patient Protection and Affordable Care act of 2010
Repeal it - 26%
Keep it - 38%
No opinion/ no answer - 36%
Healthcare costs have stabilized in most local companies, according to the 2011 survey. When asked about the percent of total
business costs that are attributable to healthcare, the replies to the current survey are almost identical to the replies in 2010.
What percent of your total business
costs are attributable to healthcare?
Pension Reform
With decreasing resources available for major public policy
commitments, the sizes and types of government pensions have
come under scrutiny. As of December 31, 2010, more than
500,000 retirees received pensions from CalPERS, the state’s
largest pension program. In addition, the program contained
nearly 1.2 million active and inactive members. 10 One recent
independent analysis places California’s pension obligations
at more than $500 billion, with the gap growing every year. 11
Bearing in mind the state’s ongoing revenue and spending
problems, the 2011 CEO Business Climate Survey asked
participants a series of questions on the pension issue.
Respondents were asked whether their companies have
pension programs, and if so, what type. The overwhelming
majority of companies responding (80 percent) have pensions,
with most offering an “undefined,” 401(k)-type plan which
means that the return (or value) fluctuates with the value of the
investment (e.g., stocks, mutual funds). Almost all government
pensions are in the “defined” format, which means that the
retiree gets a fixed amount for the life of the pension, regardless
of market conditions.
Regarding employee retirement, does your company
offer an employee pension plan and if so, what type?
The survey also asked whether governments should stay with
defined pension plans or shift to undefined pensions. By a
margin of 9-to-1, respondents opted for undefined plans.
Most federal, state and local governments
offer defined pension plans. Should they:
Keep defined plans - 7%
Shift to undefined plans, similar to a 401(k) - 71%
Eliminate all pensions - 7%
Don’t know/ no answer - 15%
Along with the question on pension type is the issue of how
long an employee should work until he or she qualifies for a
pension. Many state and local government pension programs
vest employees after 5 years, although the amount of the
pension is relatively small. The survey asked how much time
should elapse before an employee qualifies for a minimum
pension. More respondents opted for employment periods of
20 years or more.
2011
2010
Yes, Defined benefits - 15%
How long should a public employee work for his/her
government entity before qualifiying for a pension?
30%
23%
27%
7% 7%
11%
3% 2%
29% 25%
14%
23%
Yes, undefined benefits (e.g., 401(k)s) - 63%
No benefits - 22%
Don’t know/ no answer - 2%
5 years - 12%
10 years - 11%
15 years - 6%
1 - 5%
6 - 10%
11 -15%
16 - 20%
Over 20%
Don’t know/ no answer
*Note: Percentages total more than 100
because a few respondents answered “yes”
to both defined and undefined plans.
20 years - 17%
25 years - 27%
Don’t know / no answer - 27%
10 CalPERS, “Facts At a Glance: Retirement & Membership,” February 2011.
11 “Analysis of California pensions Finds Half-Trillion Dollar Gap,” The New York Times,
April 6, 2010.
13 Healthcare Reform
Pension Reform
14