Financial wellness strategies top the list for post-pandemic benefits
Benefits managers closely examine the adequacy of their programs to meet the demands of the changing workforce and the post-pandemic workplace while supporting business needs.
A good place to start is the financial burden on employees, an issue that the coronavirus pandemic has only exacerbated. The impact that workers’ financial stress has on employers makes programs to address this issue a top priority on the employee benefits agenda.
How financial hardship leads to shared costs
The problem is well documented. The growing American prosperity gap, combined with systemic barriers to the economic security of many populations, was exacerbated by the instability and insecurity of jobs and wages during the pandemic.
The thought of the financial situation alone stresses 60% of employees today. What in particular? Start with physical health costs, which a survey found led more than half of respondents to skip or postpone care. Student loans (valued at $ 1.7 trillion) weigh on 45 million Americans, carrying an average burden of $ 28,000. They fight to save, also for retirement. The average savings among all US adults who have a retirement account is $ 60,000. But around 25% have no retirement accounts at all.
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These and other financial stressors have a wide variety of major implications for the long-term health of employers. Start with lost productivity of around 47 hours per worker per year, a function of absenteeism and presenteeism when they take their money worries with them. The willingness to retire is also putting pressure on employers. If retirement is postponed for financial reasons, the employer’s health care costs and workers’ compensation insurance costs increase. And there is a cost of “lost opportunity” with fewer jobs for the next generation of workers. Overall, each year that their average retirement age increases, their staff costs increase by 1% to 1.5%.
In light of these trends, financial wellness programs have become increasingly important with employers. Increasing pressure during the pandemic accelerated the pace; By the end of 2020, 66% of employers had started basic financial literacy programs, 12% more than in 2019. But there is still room for improvement.
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Set – or reset – financial wellness strategies
The pandemic has provided a great opportunity for company benefits teams to rethink their strategies for financial wellbeing.
The typical approach today really focuses on financial literacy programs, with a focus on coaching and investment advice focused on retirement planning and 401 (k) plans. That’s okay, because the employees say these are great needs: an increased employer contribution to the pension would be great, but what the employees really want is instructions on how they can save more intelligently.
A more holistic focus on the workforce and their needs would be even better, as an employee’s financial stress is clearly more than a lack of retirement provision. There are a plethora of solutions that can be sponsored, many at little or no cost, and some may already be available, just hidden within the current range of employee benefits.
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However, it takes rigor, the use of employee analytics, and consistent execution to create financial wellness programs that address the unique needs of employee segments. The best starting point is a task force for reorientation, which brings together employee and pension specialists and whose work is clearly championed by the company management.
HR should focus its efforts on three areas for best results:
Go deep into employee needs
They will not use a single approach to benefits. Employee analyzes help to uncover specific financial weaknesses and which employee segments are feeling them. The question is which data sources are used to underpin the strategy and guide the selection of relevant solutions. Usage trends for current benefits can be a path, along with patterns for sick and vacation days usage. Pension contributions and loan patterns also help. Confidential employee surveys make sense. And consider employee personality analysis for insights that go much deeper than segmenting by generations. Analytics will be invaluable in guiding the way to financial solutions that matter to employees.
Discover the possibilities – what is needed and what is used
The level of financial illiteracy in America is shocking. It’s not just about learning how to save for retirement, it’s also about learning how to invest and how to reduce debt – and avoiding what employees would appreciate altogether. Employee support programs may well have related services that should be promoted in the program. The current range of benefits likely includes other services such as legal benefits with financial wellness resources that have been overlooked and should be encouraged. It’s worth doing an audit to uncover them even as new services are added. An industry has developed around student loan debt solutions; direct employer contributions are optional (although there are tax benefits). Paycheck advance or early wage access programs can also help employees avoid the exorbitant cost of payday loans. Just providing these services under the employer’s umbrella is a significant blessing, as otherwise they would likely not have been accessible.
Spread the word and build engagement
Design a campaign to promote the facets and benefits of the program. The best results are achieved when advertising messages are tailored to solutions for the employee segments who need them most. An optimal presentation and use of the financial wellness solutions depends on clear and concise communication that is sent regularly and via channels that are relevant to certain employee groups. Another must have is an engagement strategy to increase awareness and registration.