The topic of student loan debt and how such debt impacts retirement savings efforts has quickly become top-of-mind for retirement plan sponsors; even Congress is getting in on the action, with the recent introduction of a bill seeking to encourage employers to help their workers address student loan debt.
As a result of client demand, retirement plan recordkeepers and other service providers are aggressively rolling out student loan repayment solutions that link employees’ paychecks directly to their student loan repayment strategy. The latest to roll out a solution is Empower Retirement, which unveiled a student loan repayment program created in collaboration with CommonBond.
The Empower solution, which will be launched later this year, will be offered to workers saving for retirement who also wish to pay down their student loan debt faster and improve their overall financial wellbeing.
“Working together with employers and plan advisers, Empower believes that we can help individuals take action to achieve better financial security through smarter debt management,” says Edmund Murphy, Empower Retirement president and CEO.
According to Murphy, the partnership with CommonBond is aimed at creating a one-stop digital platform that provides educational tools and financial guidance to help individuals better understand and manage their unique financial needs. The goal of the program is to help individuals pay down their student debt faster in order to be able to focus on other goals.
From the plan sponsor perspective, Empower will offer “a turnkey solution that enables employers to make direct payments to their employees’ student loans or to their retirement plans.”
“Smart employers are recognizing the value of doing more for their employees through student loan contribution programs,” Murphy adds. “We believe these programs are mutually beneficial to workers and their employers.”
Features of the Empower program include recommendations on how individuals can best utilize their available financial resources across student debt and retirement savings; analysis and individualized information about loan forgiveness programs and other options, such as refinancing; and a direct pathway for employers to make payments to employees’ student loan payments or to their retirement savings plan.
The solution will be made available to all Empower retirement plans, pending plan sponsor agreement, as well as individual retirement account (IRA) customers.