Natixis Global Asset Management announced a new benefit to assist employees with the repayment of their student loan debt.
Explaining the new benefit approach, the company tells PLANADVISER it will contribute up to $10,000 to every full-time employee who has been at Natixis for at least five years and has outstanding Federal Stafford or Perkins Loans. The benefit will consist of one $5,000 cash payment to employees after five years of working at Natixis, followed by annual payments of $1,000 distributed over the next five years for a total of $10,000.
Tracey Flaherty, senior vice president in charge of retirement strategies at Natixis, explains the decision to offer the benefit was born out of conversations with members of Natixis’ team, especially Millennials entering the workforce right out of college.
“Millennials are delaying important financial milestones because of the burden of student debt,” Flaherty says. “In addition, research conducted by the company indicates that although the best practice for retirement saving is to start young, student loan debt is keeping a significant number of young workers from taking that first step.”
Backing up the assertion, Flaherty cites the Natixis 2015 Retirement Plan Participant Study, which shows nearly one in four (23%) Americans and more than one-third (35%) of Millennials do not contribute to a company-sponsored retirement plan because they prioritize student loan debt payments.
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Among that survey’s Millennial respondents, Flaherty notes student debt is the third most common factor for not participating, behind the perennial issues of “needing the money today” (54%) and “feeling the company match isn’t big enough” (43%). While the former issue is pretty hard to get around, one will often be surprised to find out just how much they’re able to cut back from their budget with a little conscious effort, Flaherty says. And the messaging of compound interest should make the employer match look a little more attractive.
“One of the most powerful messages is that, if a Millennial starts investing seriously at age 23 and stops at age 40, he will still have more money by age 65 than if he simply started saving at age 40,” Flaherty says. “Saving over the course of a career really can generate financial independence by retirement.”
John Hailer, president and CEO of Natixis Global Asset Management in the Americas and Asia, says the company has heard loud and clear from its younger employees about the toll student debt can take on other financial obligations, especially saving for retirement and purchasing other helpful supplementary workplace benefits. “Our extensive research on Americans’ financial health supports the need to provide student loan repayment as a benefit,” he adds.
Natixis explains its student loan repayment benefit will take effect on January 1, 2016, with initial eligibility “based on employees’ outstanding student loan balances.” The payments will be taxed at the supplemental bonus rate and cannot be combined with Natixis’ tuition reimbursement policy, the firm says.
Flaherty says Natixis looks forward to tracking the take-up rate of the new benefit program, which she explains as one more piece being added to the holistic financial wellness approach that has been adopted by corporate leadership. “This is being folded into our other supplementary benefits beyond the 401(k) and health plan,” she says, agreeing a secondary benefit of the program will be greater employee retention and more an even more powerful recruiting pitch.
While this program is for the Natixis staff, Flaherty adds the firm is committed to bringing holistic financial wellness solutions to market and will certainly learn from the experience of delivering a student loan repayment benefit to its own staffers.