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The COVID-19 pandemic and subsequent layoffs and cuts have depleted many workers’ savings and caused new financial burdens. Many Americans lost their jobs or knew someone who did. The toll of current events has left many of us with financial insecurities.
Financial stress has been increasing over the years. According to a survey done by John Hancock, 49% of Americans worry about not having enough retirement savings. The impact on employers—34% of workers spend at least some of their work time on personal finances. Employers should also account for the mental and potentially physical toll financial stress can have on their employees and productivity.
Providing financial wellness benefits is usually a voluntary option for employers. But the way things are changing, many employees expect financial wellness programs to be a part of their next employer’s benefits.
As an employer, it’s essential to know what financial wellness is and why it’s important. Employers can improve their employee’s financial health through a variety of means. Here are the top five financial wellness benefits that are most appealing to employees.
A study by SHRM and Morgan Stanley conducted in June of this year found that retirement is the most important financial wellness benefit to employees. This is no surprise, as this is the traditional financial benefit offered to employees.
Offering a retirement plan can make it easier for employees to save for their future. Employer-sponsored retirement plans help fill the financial knowledge gap and offer workers a means to improve their financial wellness. And automatic payroll deductions make it easier for employees to save.
Retirement plans with contribution matching take things a step further. They offer employers tax benefits and better recruiting and retention. Employees recognize the value of contribution matching toward their total compensation package, often leading to better employee morale and loyalty. And depending on how you use a vesting schedule, contribution matching can also become a retention tool.
Employers don’t have to contribute to employees’ retirement plans. But if you’re looking for a competitive edge for recruiting and retention, a contribution match might just be it.
The same study by SHRM also found that safety net insurance is the number two most important financial wellness benefit employees want. Safety net insurance can include many things but most commonly includes life and disability insurance.
Safety net insurance became more valuable as workers went through difficult times losing family members or falling ill themselves during the pandemic. Since this benefit isn’t a huge cost for employers, many companies already include this in their financial wellness benefits. But if you don’t, it’s worth considering based on how important it is to employees.
According to the research done by SHRM, this benefit is the third most important among currently unemployed Americans—which makes sense. A survey done last year by PwC found that 38% of workers have less than a thousand dollars in savings to deal with emergencies.
As a result, you may have seen the advertisements and new products that offer payroll advances to workers. Employers can also provide these advances, but they require a financial agreement and must adhere to certain regulations since they’re technically short-term loans. However, they’re less risky than an actual loan because the employee will have already worked for the money.
A better option might be to offer your employees an emergency savings account funded through payroll deductions. These accounts can be set up like any savings account and connected to a debit card. Funds are deducted from employees’ paychecks like a retirement account, but employees can access funds whenever without penalties. It just helps employees save that much more in case of an emergency.
While the financial wellness benefits above can be critical to employees, other financial wellness perks can add additional peace of mind.
Financial stipends can further relieve some of the financial burdens that workers may face. So consider adding one or more of these financial wellness benefits to round out your financial wellness offering and attract employees:
Last, helping employees understand how much income or retirement savings they’ll need in the future can motivate them to prepare for retirement. Many workers lack the financial literacy, resources, and tools necessary to find this information.
Consider partnering with financial consultants who can come to your workplace to talk to your employees about their financial needs. They can educate on budgeting, saving, investing, and paying off or managing debt.
When you provide any of the benefits above, education on those programs will be a necessary step in the process. To make this easier, choose a benefits provider or HR partner who can support your benefits.
And with HR support, you can save costs on retirement plans and insurance coverage so you’re able to offer more financial wellness benefits and perks. To learn more about how to build a better benefits package overall, download our guide below.