Prudential Retirement has partnered with Student Loan Genius, becoming the first retirement plan recordkeeper to offer the start-up’s new 401(k) contribution feature.
The new partnership with Student Loan Genius will enable Prudential Retirement to offer an innovative benefit to clients that gives their employees an opportunity to build retirement savings while paying down student debt. Employers who offer this retirement savings vehicle gain a competitive advantage, as it enables them to attract and retain top talent, Prudential says.
If an employer elects to add this feature to their plan, employees who make student loan payments processed through Student Loan Genius receive a pre-tax contribution to their retirement account from their employer based on that student loan payment, whether or not they contribute to their 401(k) plan or receive any matching contributions.
The contribution, paid as a flat dollar amount, or a percentage of the student loan payment or of the employee’s compensation, can be offered annually, monthly or for each payroll period. For example, an employer could offer a $75 monthly contribution to an employee who pays a $400 loan repayment each month.
“As student loan debt grows, workers are having to choose between paying off their student loans or prioritizing other important financial goals,” says Jamie McInnes, senior vice president and head of Total Retirement Solutions for Prudential Retirement. “For example, our research tells us many workers will choose to pay down debt rather than save for retirement. As an industry, we need to understand this and provide solutions to help maximize retirement security for American workers.”
A recent survey from Beyond, a job placement website, found 89% of job seekers with student loan debt believe companies should offer student loan repayment as part of the benefits package, and 10% ranked student loan repayment higher than a paid vacation policy as the “most important” benefit.