Benefits, whether they’re retirement investment accounts or health insurance, are guided more and more by their consumers — employees. The primary reason for this comes down to individual responsibility and where it should rest: with the individual or with the organization employing the individual.

In today’s business climate, the idea of a company taking care of its employees, watching over their health and steering them into retirement, is widely outmoded. For one thing, the cost of doing so has become a crippling disadvantage in a highly competitive, global economy.

Further, the idea of doing so in an age in which an employee might move to several companies over the course of a career is unrealistic.

So, responsibility for health and retirement benefits now is placed with the employee more often than not, and new ways of giving employees control over such benefits continue to emerge and mature. For talent managers, then, it’s important to understand the advantages and potential pitfalls of allowing consumers to direct and drive benefits.

The Pension Age is Over

In the “2006 Benefits Survey Report” by the Society for Human Resource Management (SHRM), 48 percent of HR professionals surveyed indicated their organizations offered defined-benefit retirement plans. With these plans, the employer promises to pay a certain benefit upon employees’ retirement, with the benefit amount calculated based on factors such as age, earnings and length of service.

Even fewer — just 10 percent — indicated their organizations offered cash-balance pension plans.

“Obviously, the days of the pension are long gone,” said John Estes, vice president of IT staffing firm Robert Half Technology.

With defined-benefit retirement and cash-balance pension plans, employers bear the investment risk because they have to pay the promised benefit regardless of the plan’s investment performance. So, the majority of employers have shifted this risk over to the employee.