In the past five years, defined contribution (DC) plan sponsors likely to add or expand financial wellbeing programs has expanded from 30% to 65%, according to Alight’s “2019 Top Topics in Retirement and Financial Wellbeing: Building on the Past, Working Toward the Future.”
Sponsors’ No. 1 goal for their participants has moved from increasing savings rates to addressing workers’ broad financial wellbeing and helping them achieve retirement readiness.
Specifically, 64% of employers say their financial wellness program is more important at their organization than it was two years ago. They see four stages of financial wellbeing: 1) understanding income and expenses, and managing debt; 2) establishing savings goals and understanding investments and insurance; 3) understanding investment vehicles and maximizing asset growth; and 4) estate planning and understanding Social Security.
The most common topics their financial wellbeing programs cover are: the basics of financial markets and simple investing (cited by 50%), budgeting (44%), health care education and planning (39%), financial planning (38%), debt management (32%), emergency and retirement savings (21%) and assistance with other financial goals, such as home purchases and college savings (25%).
Asked what areas of financial wellbeing they feel responsible to help their employees with, the employers say saving for retirement/long-term needs (83%), obtaining disability insurance (72%), obtaining life insurance (70%), obtaining identity protection services (27%), establishing an emergency fund (22%), creating or managing a budget (20%), saving for children’s education (20%), saving for short-term needs (19%), help with debt management (19%) and paying off student loans or refinancing (16%).
Asked about their reasons for offering a financial wellness program, employers say it is to enhance the overall employee experience (84%), because it is the right thing to do (82%), to increase employee engagement (72%), to differentiate the workplace (53%), to decrease employee time spent addressing financial issues (49%), to improve retirement statistics (49%), because employees are asking for such a program (43%), and, finally, to decrease medical costs (28%).
Asked how they measure the effectiveness of their financial wellbeing programs, 76% say employee usage, 58% say employee engagement, 51% look at retirement statistics, 21% consider medical costs and 9% look at absenteeism.
Asked what aspects of employee behavior in defined contribution (DC) plans are important to address, employers say addressing broad financial wellbeing (32%), retirement readiness (27%), encouraging higher contributions (16%), minimizing leakage (11%) and increasing participation (7%).More findings from Alight Solutions’ study are here.