In today’s competitive job market, where voluntary quits have declined from 43.3% of workers in 2023 to 38.5% in 2024, employers are discovering that traditional compensation packages alone aren’t enough to retain top talent. Voluntary benefits—supplemental insurance and wellness programs employees can choose to purchase at group rates—have emerged as a powerful retention tool that addresses workers’ evolving needs while strengthening their connection to their employer.
45% of organizations say retention is their top priority for 2024, and 62% of HR teams agree, making voluntary benefits a critical component of comprehensive retention strategies. Unlike mandatory benefits, voluntary benefits allow employees to customize their coverage based on personal circumstances, creating a more personalized and valuable employment experience.
Helpful Facts
- 42% of voluntary departures are preventable - Often through expanded benefits packages
- 75% of employees want more benefits - Voluntary programs offer personalized coverage options
- Cost-effective for employers - Employees pay premiums while gaining group rates
- Addresses financial stress - 92% seek financial support; voluntary benefits fill critical gaps
- Proven retention results - Companies with diverse voluntary benefits show higher retention success
How Do Voluntary Benefits Impact Employee Retention Rates?
The connection between voluntary benefits and employee retention is backed by compelling data. 42% of employees who voluntarily left their organization in the past year report that their manager or organization could have done something to prevent them from leaving their job—and expanded benefits packages often represent that missing piece.
Research shows that three out of four employees want their employers to add benefits within the year, according to a Principal® 2024 survey of business owners. When employers fail to meet these expectations, they risk losing talent to competitors who offer more comprehensive benefits packages.
The financial impact of poor retention is significant. Around two-thirds of voluntary employee departures were preventable, with the loss of skills, customer relationships, and knocks to employee morale giving rise to great direct and indirect costs.
What Types of Voluntary Benefits Do Employees Value Most?
Financial Wellness Benefits
92% of employees in an annual survey sought additional financial support resources from their employers, with 58% saying they’re living paycheck-to-paycheck. Financial wellness benefits have become particularly valuable, including:
- Emergency savings programs
- Financial counseling services
- Student loan assistance
- Legal services plans
Health and Protection Benefits
Employees prioritized health insurance (68.1%) and retirement plans (59.9%) as key retention benefits, but voluntary supplemental coverage fills important gaps:
- Critical illness, accident and hospital indemnity plans are among the longstanding, widespread voluntary benefits offered to employees as supplemental health benefits
- Disability income insurance
- Pet insurance
- Vision and dental coverage enhancements
Lifestyle and Convenience Benefits
Modern employees value benefits that support work-life balance and personal convenience:
- Pet insurance, wellness benefits, auto & home insurance
- Childcare assistance
- Elder care support
- Identity theft protection
Why Are Voluntary Benefits More Effective Than Traditional Retention Methods?
Cost-Effective for Employers
Voluntary benefits offer group purchasing power without requiring employer premium contributions. This allows companies to expand their benefits portfolio while maintaining budget control, making comprehensive benefits accessible to organizations of all sizes.
Addressing Financial Security Concerns
One in three employees say they cannot afford a $500 unexpected expense, making supplemental insurance and financial wellness benefits particularly valuable. When employees feel financially secure, they’re more likely to remain with their current employer.
How Can Employers Implement Voluntary Benefits to Maximize Retention?
Conduct Employee Needs Assessments
Understanding your workforce demographics and preferences is crucial. Survey employees about their most pressing needs and current benefit satisfaction levels to identify gaps that voluntary benefits can fill.
Focus on Education and Communication
49% of employees will look for a new job in the next 12 months due to confusion or dissatisfaction with benefits. Clear communication about available voluntary benefits and their value is essential for maximizing participation and retention impact.
Partner with Experienced Benefit Providers
Working with established insurance agencies that understand both employer needs and employee preferences ensures access to competitive rates and comprehensive coverage options. Look for providers with extensive carrier relationships who can offer multiple options across different benefit categories.
Integrate Benefits into Broader Retention Strategy
Voluntary benefits work best when integrated with other retention initiatives like professional development opportunities, flexible work arrangements, and recognition programs. 60.6% of employees desire career growth opportunities such as professional development and 56.3% want promotion pathways.
What Results Can Employers Expect from Voluntary Benefits Programs?
Improved Employee Satisfaction and Loyalty
Organizations that stated they were successful in their attraction and retention efforts were more likely to offer a variety of voluntary benefits, including access to legal services plans (36% compared with 30%) and long-term care insurance (18% compared with 10%).
Reduced Turnover Costs
With the average voluntary turnover rate in the US at 13.5% in 2024, even modest improvements in retention can generate significant cost savings when considering recruitment, training, and productivity loss expenses.
Enhanced Employer Brand
Companies offering comprehensive voluntary benefits packages position themselves as employers who genuinely care about employee wellbeing, improving their ability to attract top talent in competitive markets.
Common Questions About Voluntary Benefits and Employee Retention
Q: How quickly do voluntary benefits impact retention rates? A: While individual results vary, many employers see improved employee satisfaction surveys within 6-12 months of implementation, with retention improvements typically visible within the first year.
Q: Which voluntary benefits provide the best ROI for retention? A: Critical illness coverage, disability income and accident insurance are among the voluntary benefits that employees are increasingly prioritizing because such benefits often offer better value than if employees were to buy this coverage privately.
Q: Can small businesses afford to offer voluntary benefits? A: Yes, because employees pay the premiums, voluntary benefits require minimal employer investment while providing significant value to the workforce.
Taking Action: Building Your Voluntary Benefits Strategy
In today’s competitive job market, voluntary benefits represent a strategic advantage for employers serious about retention. With job turnover at an all-time low with a 2.1% quit rate starting off 2024, now is the ideal time to implement comprehensive voluntary benefits programs that demonstrate your commitment to employee wellbeing.
The key to success lies in understanding your workforce’s unique needs, partnering with experienced benefit providers, and maintaining clear communication about available options. By taking a strategic approach to voluntary benefits, employers can create a more engaged, satisfied, and loyal workforce while maintaining cost control in an increasingly competitive talent market.
Whether you’re looking to enhance your current benefits package or starting from scratch, voluntary benefits offer a proven path to stronger employee retention and organizational success.
How Can Post Insurance Help?
Providing “Smarter Insurance Since 1954,” Post Insurance is a third-generation insurance agency with expertise in benefits insurance of all types. Our team understands the unique needs facing businesses of all sizes and works with over 50 top insurance companies to find you the most current and cost-effective voluntary benefits protection available.
You may have been recommended to us by one of our many satisfied customers, or you may have searched online for “employee benefits near me” or “voluntary benefits provider.” However you found us, we’re happy to welcome you. If you have questions about implementing a voluntary benefits program that strengthens employee retention or would like to receive a quote, please fill out our contact form or call 800.262.9998.