When faced with economic uncertainty and market volatility at the onset of the coronavirus pandemic, employees flocked to their companies’ financial wellness programs, Prudential found in a survey of nearly 700 retirement plan decisionmakers in May.
Seventy-two percent of these retirement plan executives said their financial wellness programs were in greater demand, with 28% saying the uptick was sizable. They also said employees were looking for a mix of financial advice and emergency assistance.
“To have employees resoundingly turn to financial wellness resources serves as both confirmation of their value and an opening to build on this strong foundation,” says Harry Dalessio, head of institutional retirement plan services at Prudential Retirement. “As the pandemic has evolved, so have personal finances. Employers have an opportunity to meet the ongoing and changing needs that are surfacing.”
Sponsors said that when they heard from their employees at the onset of the pandemic, they were primarily focused on the immediate health and safety of their employees and the financial impact of the pandemic on the company. But even before the pandemic hit, more than a quarter of sponsors said they were already planning to enhance their financial wellness offerings in a variety of ways.
The top five ways sponsors are looking to enhance their financial wellness programs are improving digital communications (33%), expanding the definition of hardship withdrawals to include disaster relief (31%), making it easier for employees to take out a hardship withdrawal (28%), adding a new financial wellness program (27%) and adding an in-plan retirement income option (25%).
Twenty-three percent of sponsors are considering adding an emergency savings option, expanding employer contributions and changing their fund lineup, including by adding stable value.
As far as their retirement plan is concerned, sponsors say the pandemic is causing them to consider improving plan design and offerings.
Those planning to make no changes were clearly in the minority, at a mere 11%.
Dalessio says financial wellness programs also succeeded in calming workers’ nerves and preventing them from making hasty decisions in response to the market turbulence. Sponsors reported that they were not getting questions from workers about losses or delayed retirement.
Prudential says this is in line with what it experienced at its call centers, with just 10% of Prudential clients’ plan participants taking a hardship withdrawal, or a coronavirus-related distribution (CRD) or loan.
“Having access to financial wellness resources, including education about budgeting, emergency savings and debt management can help employees consider a range of alternatives rather than simply tapping their retirement plans,” Dalessio says. “This can deter workers from overreacting during a crisis, which can have a positive, long-term impact on their retirement security.”
Prudential conducted the online survey of 666 plan sponsors between April 22 and June 2.