Benefits managers are taking a hard look at the adequacy of
their programs to meet the needs of the changing workforce and the
post-pandemic workplace, while supporting business imperatives at the same
A good place to start is addressing employees’ financial
stress, an issue that the coronavirus pandemic only aggravated. The impact that
employee financial stress has on employers makes programs that address this
problem a top priority on the employee benefits agenda.
How financial distress exacts shared costs
The issue is well-documented. The growing American wealth
disparity combined with systemic obstacles to the economic security of many
population segments were worsened with the instability and uncertainty of jobs
and pay during the pandemic.
Today, just thinking about the state of their finances
stresses out 60% of employees. What in particular? Start with the cost of
staying physically healthy, which one survey found has led over half of
respondents to skip or delay care. Student loan debt (at $1.7 trillion) burdens
45 million Americans who carry an average load of $28,000. They struggle to
save, including for retirement. Among all U.S. adults that have retirement
accounts, the median savings is $60,000. But about 25% have no retirement
accounts at all.
Those and other financial stressors have a big impact on the
long-term health of employers in myriad ways. Start with productivity losses of
some 47 hours per worker per year, a function of absenteeism and presenteeism
when they take their money worries to work with them. Retirement readiness also
pressures employers. When retirement is put off for financial reasons, the
employer’s costs for healthcare and workers’ compensation costs escalate. And
there are “lost opportunity” costs with fewer openings for next generations of
workers. Overall, each year added to their average retirement age pushes their
workforce cost up 1% to 1.5%.
In the face of these trends, financial wellness programs
have gotten increasing traction among employers. The mounting pressures during
the pandemic accelerated the pace; by late 2020 66% of employers had initiated
financial literacy programs, up 12% from 2019. But there’s still room for
Setting – or resetting – financial wellness strategies
The pandemic has provided a big opportunity for employee
benefits teams to rethink their financial wellness strategies.
The typical approach today really centers on financial
literacy programs, with a focus on coaching and investment advice geared to
retirement savings and 401(k) plans. That’s fine, because employees say those
are big needs: an increased employer contribution to their retirement savings
would be great, but what employees really want is guidance on how to save
Better yet would be a more holistic focus on the workforce
and its needs, as clearly, there’s more to an employee’s financial stress than
retirement savings shortfalls. There’s a wealth of solutions to sponsor, many
at a low, or no cost, and some may already be available, just hidden within the
current employee benefits lineup.
It does take rigor, utilization of employee analytics, and
follow-through, though, to create financial wellness programs that respond to
the particular needs of employee segments. The best starting point is through a
task force for the re-set that brings together employee and retirement benefits
specialists and whose work is clearly championed by company leadership.
HR should concentrate its efforts on three areas for optimal
Dig deep into employee needs
A one-size fits all approach to benefits will leave them
underutilized. Employee analytics will help uncover specific financial pain
points and which employee segments are feeling them; the issue is which data
sources will be used to inform the strategy and guide the choice of relevant
solutions. Utilization trends for current benefits can be one avenue, along
with patterns for sick and vacation day usage. Retirement plan contribution and
borrowing patterns also help. Confidential employee surveys are useful. And
consider employee persona analysis for insights that go much deeper than
generational segmentation. Analytics will be invaluable for pointing the way to
financial solutions that matter to employees.
Explore the possibilities — what’s needed and will be
The level of financial illiteracy in America is shocking.
It’s not just learning how to save for retirement, but how to invest and how to
dig out from debt — and avoid it altogether that employees would value.
Employee assistance programs may well have related services, which should be
promoted in the program. The current benefits lineup likely has other services
like legal benefits with financial wellness resources included that have been
overlooked and should be promoted. It’s worthwhile to do an audit to uncover
them even as new services are added. An industry has been built around student
loan debt solutions; direct contributions by employers are optional (though
there are tax benefits for doing so). Paycheck advance or early wage access
programs can also help employees avoid the usurious costs of payday loans. To a
significant extent, just the act of providing these services under the
employer’s umbrella is a boon as they likely would have otherwise been
Get the word out and build engagement
Design a campaign to promote programs facets and benefits.
The best results will come when promotional messages are aligned with solutions
for the employee segments that need them the most. Optimal exposure and
utilization of the financial wellness solutions will hinge on communications
that are clear and concise, sent regularly and through channels that are
relevant to specific employee groups. Another must-have is an engagement
strategy to drive awareness and enrollment.
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