Financial Well-being: Key Insights from the January 2020 Employer Benchmarking Call Series

While programs and benefits strive to meet the demands of employees and their families, employers recognize there is still room for improvement, based on the uptake of 401(k) loans, payday loans and data on employees’ financial health needs.

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May 12, 2020

At the beginning of 2020, large employers across ten industries came together with their peers to discuss ways to support employees’ financial well-being – from budgeting, paying off consumer debt to saving for retirement and eliminating student loans. While programs and benefits strive to meet the demands of employees and their families, employers recognize there is still room for improvement, based on the uptake of 401(k) loans, payday loans and data on employees’ financial health needs.

This set of Key Insights will share examples in the following areas:

  • Learning about employees’ financial needs
  • Budgeting and debt management
  • Retirement planning
  • Student loan counseling and repayment
  • Addressing social determinants of health (SDOH)

You can navigate to the sections using the Table of Contents to the right. 

#1Learning About Employees' Financial Needs

A few employers across different industries made strides to collect information on employees’ financial challenges and status, either soliciting directly from the employee or using a third party to do research on their behalf. Having this information allows employers to make the case for any new programs on the horizon or even direct communications about existing financial well-being programs.

Below are examples of how employers are learning about their employees’ financial needs:

Financial Services

A financial services company conducted a survey of 1,000 employees and followed up with “empathy interviews,” one-on-one interviews with a skilled interviewer trained in getting employees to open up about how financial issues make them feel and the emotions associated with the topic. The interviewer asked employees to rate their financial well-being and share personal challenges with money. Through these interviews, employees disclosed their struggle with debt; some have such high student loans that they can’t even pinpoint the exact amount. Employees looking to further their education voiced the need for lower-cost education options.

Technology

One technology employer created a survey to pop up on specific internal benefits websites. This survey has a high response rate, from U.S.-based and global employees alike.  The company’s employees are struggling with budgeting and debt, specifically, credit cards and student loans.

Health Care Services

One health care company found through its employee engagement survey that some employees were struggling to cover the deductible in their health plan. Based on this finding, the company put in a low-cost, high-value plan for those earning under the 250% poverty line, which included 900 employees.

Technology

One technology employer offers a money coach program. The utilization data from the program has informed the company on why employees seek assistance from a coach. Budgeting is consistently the number one need, followed by retirement, investments and taxes.

Financial Services

An employer in the financial services sector leverages Experian’s research services to learn more about its employees’ financial status. Experian can create aggregate anonymized reports based on employees’ credit records, which can inform programs focused on debt.

#2Budgeting and Debt Management

Many employers view budgeting and debt management as the very foundation of their financial well-being programs. With employees struggling with the day-to-day expenses of running a home and commuting to work, employers look to coaching, educational programs and loan plan design to address these issues.

Transportation and Shipping

A transportation and shipping employer leverages a checklist from its retirement provider, which is an interactive form that helps create a personalized action plan for the employee. Even before company formally launched this tool, the employer saw a high level of participation.

Transportation and Shipping

Another transportation and shipping company includes financial questions as part of its well-being assessment. At the end of the assessment, the employee is offered suggestions on next steps they can take to improve their finances. The company also offers one-on-one counseling through Operation Hope, a financial literacy provider.

Aeospace and Defense

A company in the aerospace and defense industry has included financial modules in its health coaching program.

Transportation and Shipping

Another transportation and shipping company is piloting a program to provide basic financial resources based on generational needs. As part of its interactive, personalized Total Rewards portal, employees can click an “Optimize” button that illustrates ways they can make the most of their earnings. The employer reports very high utilization of this tool.

Insurance Company

An insurance company is considering using Brightside and Banzai to provide a service focused on an employee’s current financial situation. The program’s goal would be to help employees create a practical budget and savings plan from a realistic perspective.

 Aeospace and Defense

Payday loans are an area of concern for large employers due to their high interest rates and the predatory practices of loan providers on low-wage earners. As an alternative to these loans, an aerospace and defense employer with a manufacturing population offers limited, short-term loan consolidation through Kashable. Except for the payroll deduction, the process is run completely through the vendor. Another solution to payday loans shared by another aerospace and defense company was Purchasing Power, a website in which employees can buy bigger ticket necessities—like a washer, dryer or refrigerator—with interest included in the cost, which is based on the individual’s credit score.

Lastly, many industries lamented that employees are turning to their retirement accounts as a first source of funds during an emergency. Coined 401(k) loans, these differ from hardship loans in that employees do not need to explicitly state a reason for needing the funds. However, with borrowing rates ranging between 20% and 40%, employers are concerned that employees are turning to 401(k) loans as an easy way to access money, opposed to as a last resort.

Here are some strategies employers have used to reduce the incidence of 401(k) loans:

Transportation and Shipping

One transportation and shipping employer has seen a 25% loan usage rate, which has led to a robust communication effort to alert employees to the long-term impact of pulling from 401(k) accounts and emphasizing the benefit of emergency funds as an alternative.

Aeospace and Defense

Many employers see “repeat offenders” of 401(k) loans; an employee will pay off one loan, then turn around and take out another. One aerospace and defense employer restricted the number of loans that an employee could have at one time from two loans to one.

Health Care Services

A health care employer sought to get to the root cause of these loans: By digging into its data, the company found that employees were mismanaging their personal finances, which also resulted in employees struggling to pay off the 401(k) loans.

#3Retirement Planning

With retirement planning traditionally serving as the hallmark of financial well-being, employers are looking to invigorate messaging and tools to spark employee interest in saving for retirement. For some employers, employee feedback (including survey data) indicates that concerns about being prepared for retirement are widespread. As mentioned in the debt management section, employees are relying on their retirement accounts as an emergency fund (through 401(k) loans), which has employers concerned about their ability to budget for the unexpected and account for penalties associated with 401(k) loans.

Financial Services

One financial services company shared the success of its Seeds to Grow campaign, which metaphorized saving for retirement by comparing it to planting seeds that grow into flowers. The campaign generated a lot of conversation, which led to a spike in enrollment in the company’s retirement plan.

Aeospace and Defense

Some employers are looking to tools that have been modernized for today’s workforce. An aerospace and defense employer offers Empower Retirement, which features a fresh take on the online experience. Coupled with a financial wellness incentive of an $100 contribution to a 401(k), the program has attracted 80% of the company’s employees.

Aeospace and Defense

Another aerospace and defense company surveyed its employees and found that 48% worry that they don’t have enough money for retirement, and a high number find their current financial situation to be stressful. The focus of the company’s financial well-being program is to create awareness about available resources.

#4Student Loan Counseling and Repayment

For many employers (and their employees), student loan debt is a significant burden for American households, ranging from new hires trying to live on their own, to mid-career employees looking to save for other priorities such as retirement and their kids’ college tuition. Four employers shared their repayment program design, described below. Others on the call either expressed interest in a repayment program, were approaching it from a counseling standpoint or were at odds with the idea of employers playing a role in paying off debt. Many employers agreed that student loan repayment can be a recruitment and retention tool for some jobs that are challenging to keep fully staffed, such as nursing and engineering. There was also chatter about two creative models to address student loan debt, designed by trailblazers Unum and Abbott Laboratories.

Transportation and Shipping

One transportation and shipping employer has allowed employees to apply for student loan repayment through its employee emergency relief fund.

Financial Services

An employer in the financial services industry introduced its student loan repayment program in 2016. Employees in good standing can receive a monthly payment of $166.67, with the maximum topping off at $10,000. Those eligible for the program are at the manager level and below – which is about 24,000 employees. About one-quarter have signed up. The program does not cover Parent PLUS loans or spousal/partner student loans.

Health Care Services

A health care employer is in the midst of developing a student loan repayment program, weighing the possibility of offering different levels of reimbursement based on type of employee, recognizing that some clinical roles require extensive schooling. The amount being considered ranged between $50 and $200 per month, with a lifetime maximum between $10,000 and $20,000.

Insurance Company

An insurance company shared its evolution from a refinance program to a straight repayment program, which occurred in January 2020. Similar to the financial services example, the repayment program is available to employees at the manager level and below with a tenure of over 6 months. The employer pays $125 per month directly to the loan provider, with a maximum of $10,000. The company has received great feedback from employees. Since the payment is sent directly to the loan provider and not through the employees’ paychecks, the employee is responsible for any taxes incurred by the payments.

#5Addressing Social Determinants of Health

Employers on the line were asked to share how they are addressing housing, health care, education and commuting costs, knowing that high expenses in these areas can influence an individual’s ability to lead a healthy life. Employers also shared how they are supporting employees on the lower end of the wage scale through programs and benefits. Based on these conversations, this area of financial well-being appears to be in its infancy for most large employers.

Technology

Housing: One technology/telecommunications employer promotes SOFI’s mortgage platform to help employees looking to buy a home. Different financial services are offered, such as help calculating down payments and navigating private mortgage insurance (PMI).

Transportation and Shipping

On-site Amenities: A transportation and shipping employer has focused on on-site amenities in two major cities. Amenities offered include providing shower facilities for those working double shifts and parking spots for employees to park their RVs.

Technology

Transportation: A technology company provides a shuttle between two locations based in San Francisco and San Jose.

Transportation and Shipping

Health Care: Two employers operating in the transportation and shipping industry shared that employees with a rare cancer diagnosis in their family are at risk for a financial crisis, largely because some treatments are not covered by the plan due to the fact that they are experimental. One of the employers is addressing this issue by offering a second-opinion service to help employees navigate through treatment options.

Financial Services

Pharmacy: One financial services employer instituted an affordable copay design for prescription drugs, after learning that upwards of 30% of medications are abandoned due to cost. The copays are $13 and $35 for brand-name drugs.

 Financial Services

Income: A financial services employer designed a program called “Got 6 Movement” for its low-wage earners to encourage these employees to save more. The company offers tools and resources on how to save money for emergencies and for short-term goals, like a vacation, as well as long-term needs, like retirement. The company communicates by sharing success stories and messaging adapted to the season.

 Technology

Income: A technology/telecommunications employer provides early access to employees’ biweekly salary.

 Multiple Industries

Income/Health Care: Employers across multiple industries use salary bands to determine employee premiums for their medical plans.

 Aeospace and Defense

Income: An aerospace and defense employer deployed a “Working Credit” program that helps employees improve their credit score, which can increase their net pay without a salary increase. Sixty percent of employees saw improved scores in the first 6 months.

 Health Care Services

Income/Health Care: As part of a health care company’s commitment to pay a livable wage, employees earning a lower salary can submit an application to receive support for their health care expenses through reduced premiums for health and dental benefits and either a 50% or 100% discount on coinsurance and the deductible. The company has also structured its tuition assistance to provide the funding upfront so lower-wage employees can pay for their courses when the bill is due.

 Transportation and Shipping

Education: One transportation and shipping employer has a scholar program for employees to obtain a college degree online at a highly subsidized rate.

 Health Care Services

Income: A health care provider piloted a program in which educational providers work with supervisors/leaders with a large percentage of low-wage earners to develop communications about retirement and savings in simple terms.

Please join us for our next round of Industry Benchmarking calls! Contact us to learn more.

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TABLE OF CONTENTS

  1. Learning About Employees' Financial Needs
  2. Budgeting and Debt Management
  3. Retirement Planning
  4. Student Loan Counseling and Repayment
  5. Addressing Social Determinants of Health