Employers Feel More Responsible for Employees’ Financial Wellness
More and more employers feel responsible for improving workers’ financial health as workers experience more stress due to the COVID-19 pandemic, new research shows.
62 percent of employers feel “extremely” responsible for the financial health of their employees, up from 13 percent in 2013, according to Bank of America’s 2020 report on corporate performance. The results are based on a March survey of 808 employers sponsoring 401 (k) plans, compared to results from previous annual Bank of America surveys.
The range of topics covered by corporate financial wellness programs has also increased since 2013, according to the survey. Employers are now more likely to take up broader aspects of workers’ financial lives, often by offering advice, advice or training on:
- Saving for retirement (Offer from 81 percent of employers in 2020 compared to 70 percent in 2013).
- Planning of health costs, including the use of health savings accounts (71 percent of employers versus 38 percent).
- budgeting (63 percent of employers, versus 14 percent).
- Savings on college expenses (55 percent of employers, versus 13 percent).
- Debt management. (54 percent of employers, versus 15 percent).
“Over the past decade we’ve seen a significant increase in the availability of financial wellness programs that have become an integral part of the benefit offerings,” said Lorna Sabbia, director of retirement and personal wealth solutions at Bank of America. “While this growth is essential and encouraging, the pandemic has brought the issue of holistic wellbeing more into focus.”
As a result of lower wages and other economic uncertainties, she added: “Employees are exposed to greater stress and time expenditure, which affects their general well-being. More needs to be done to ensure that employees feel supported at work – financially, physically, emotionally and mentally. “
Good business reasons have also driven the expansion of these programs, the report says. More than 8 in 10 employers believe that employee financial wellbeing programs and tools help create more productive, loyal, satisfied, and engaged employees.
Bank of America also surveyed 996 full-time employees participating in 401 (k) plans and found that only 41 percent of women rated their financial well-being as good or excellent, compared with 58 percent of men. Among the differences were women:
- More likely to feel a lack of control over their debts (67 percent versus 49 percent of men).
- A lack of cash after monthly expenses is reported almost twice as often as the primary challenge for achieving financial goals (47 percent versus 27 percent of men).
“Women have inherently different financial paths than men, so there is a clear need for employers to target financial wellness solutions by both age and gender,” said Kevin Crain, Head of Workplace Solutions Integration, Bank of America.
A shift in advantage
According to the nonprofit Employee Benefit Research Institute (EBRI), employers are adapting their financial wellness solutions to the changing needs of their employees – and their own new budget constraints. In June and July, EBRI surveyed 250 social benefit decision makers in US companies with 500 or more employees.
The answers showed how the financial wellness mix has changed. Since 2018, debt advice and incentives related to saving and financial measures have become increasingly popular with the employers surveyed. However, over the same period, companies were less likely to offer tuition reimbursements, rebate programs, or bank-at-work partnerships, either because of cost or a perception that these benefits were not appreciated by employees.
Around 27 percent of those surveyed provided an emergency fund or employee hardship this year, hardly changed compared to 2018. The emergency aid is most likely to give active employees the opportunity to withdraw from their retirement provisions, to enable paid leave donations or to share vacation Employees and provision of aid funds for employees in need.
The survey also found that:
- Employee satisfaction, employee retention and stress relief were the main reasons for offering financial wellness initiatives.
- Costs – both for the employer and for the employee –The top challenges in offering financial wellness benefits were followed by concerns about the complexity of the employees using the programs, data and privacy concerns, and perceived disinterest among employees.
Determination of needs
EBRI found that the most common steps taken to understand employees’ financial needs were reviewing employee contributions and withdrawals, interviewing employees, and analyzing aggregated health data.
“A total of 88 percent [of employers] took at least one step to understand their employees’ financial wellness needs, “said Craig Copeland, senior research associate at EBRI.” Three-quarters of companies examined some type of existing employee data and 56 percent used qualitative methods. “Interviews or lead focus groups with their employees.
Open enrollment options
Employees are approaching open enrollment with a newfound determination to prepare for what lies ahead and their personal finances are paramount, according to service provider MetLife.
Based on a July survey of 1,000 full-time workers in the US:
- 69 percent of respondents said improving their financial health was one of their top goals this year. Forty-five percent feel insecure about some aspects of their finances – one of which is that they feel reluctant to compare to their peers and have no experience with personal finances.
- 27 percent of employees are more interested in life insurance this year, and 22 percent are more interested in paying for care with input tax money via health savings accounts or flexible spending accounts and having access to financial planning and educational instruments.
“In this difficult environment, it is important that employers understand the stress, anxiety and insecurity of employees,” said Meredith Ryan-Reid, senior vice president and head of financial wellness and engagement at MetLife. “Employees understand that social benefits play a crucial role in achieving financial security and will use this year’s registration to make more conscious use of these offers in the future.”
Related SHRM items:
Emergency Savings Accounts Funded by Payroll Deductions Boost Financial Wellbeing, SHRM Online, September 2020
How Income Advances Loans Help Financially Stressed Employees, SHRM Online, Feb 2020
Helping Employees Save For The Unexpected Pays Off, SHRM Online, August 2019
6 Ways To Measure The Success Of Financial Wellness Efforts, SHRM Online, January 2019
Related SHRM resources:
Open Enrollment Guide & Resources
[Visit SHRM’s resource page on open enrollment.]