A survey of North American plan sponsors by the International Foundation of Employee Benefit Plans (IFEBP) revealed nearly two in five respondents feel a responsibility to educate employees about pension and benefit options, encourage retirement savings and help participants/employees become financially literate managers of their money. Half of all organizations offer benefits literacy education, nearly half offer retirement security education, and about one-quarter offer financial literacy education.
According to the survey report, “Financial Education for Today’s Workforce: 2014 Survey Results,” the two most common reasons for providing financial education are increasing participants’ ability to manage money and improving retirement asset allocation/investment decisions. Half of organizations have experienced increased demand from participants for financial education in the past five years.
Among organizations offering financial education, the three most common topics are retirement plan benefits, investments and savings. About one-quarter of organizations providing financial education have assessed which topics are needed most by their populations, and about half are considering doing so. One in ten organizations targets financial education around life events, and nearly one in five is considering doing so. Nearly one in five customizes financial education based on age/generation.
The biggest obstacle to providing financial literacy education to employees cited by respondents is a lack of interest among participants (cited by half of respondents).
Most respondents believe personal financial issues have a significant impact on the overall job performance of their participants (see "Financial Wellness Not Just a Benefit for Employees"). In addition, most rate the overall stress level of their employee/participant population as medium to high. The two most commonly cited financial challenges affecting participants were trouble saving for retirement and credit card/other debt.
Most respondents rate the financial savviness of their population as medium to poor, and believe the average employee/participant in their organization is not well-prepared for retirement upon reaching retirement age. Compared with five years ago, more than three in five respondents believe their participants face more personal financial challenges today (see "What Can a Financial Wellness Program Accomplish?"). Fewer than one in ten believe participants face fewer challenges.
The survey found financial education is most commonly provided by in-house staff, plan recordkeepers/administrators and investment managers/providers. Some of the most common methods of providing financial education are voluntary classes/workshops, retirement income calculators, online resources/courses, free personal consultation services and projected account balance statements and/or pension benefit statements. Respondents regard voluntary classes/workshops and free personal consultation services as the most effective financial education methods. Additionally, respondents rate one-on-one in-person meetings as considerably more effective than larger group meetings or one-on-one online/phone meetings.
“Employers are finding that successful education depends on customization,” says Julie Stich, director of Research at the IFEBP, based in Brookfield, Wisconsin. “Offering education in multiple languages, to spouses, or based on specific criteria such as age, income or life events will increase interest and increase the number of employees who benefit.”
“By providing a variety of resources, employers have opened doors for employees who want to become better educated about their finances, benefits and retirement security,” says Michael Wilson, CEO of the IFEBP. “We are encouraged that so many of our members are establishing financial education programs in their workplace, and we hope that employees not only take advantage of these benefits, but also use what they learn to better prepare themselves for their financial future.”
In February, the IFEBP surveyed member organizations across the United States and Canada, receiving 397 responses (310 from the United States and 87 from Canada). Nearly half of the respondents represent corporations, nearly one-third represent multiemployer trust funds, and about one in five represents public employers/governmental entities. A wide cross-section of industries, fund sizes and regions/provinces were represented.
The survey report may be downloaded from here.