Nobody cares about your retirement as much as you, but employers across the nation are taking a greater interest in financial well-being programs. In fact, the majority of companies feel a sense of responsibility for the financial wellness of their employees, altering the benefits, resources, and financial education they offer.
A new study by Bank of America Merrill Lynch finds that 83% of all employers believe they should take a role in providing financial wellness programs to workers. Nearly three-quarters of plan sponsors surveyed, including 90% of large companies, defined as those with $100 million or more in 401(k) plan assets, believe that financial wellness solutions will be standard elements of benefits packages in 10 years, with large companies leading the way in implementing programs.
Today, nearly one-quarter of plan sponsors have a strategy in place to help employees improve their financial wellness, with more intending to add it in the next two years. This not only helps workers plan for retirement, but also makes good business sense as financial wellness programs increase employee satisfaction, loyalty, engagement, and productivity. Saving for retirement and planning for health care costs are the top two areas of guidance provided by employers. Yet rising costs threaten how employers spend benefit dollars.
Over the past two years, 83% of employers have experienced a rise in health care costs, on average by 11%. Among companies that have experienced an increase, 60% have passed along at least a portion to employees, with small companies the least likely to do so. Half of all human resource professionals reported a significant to moderate impact on other benefits, with 55% reducing benefit spending as a result. The most common benefit reduced was 401(k) and pension plans, followed by employee education and equity compensation.
Employers are also increasing their use of health savings accounts (HSAs), which are tax-advantaged accounts specifically used to pay for qualified healthcare expenses. The coinciding insurance plans with HSAs carry higher deductibles and lower premiums, so they are often seen as an attractive method to lower health care costs. HSAs may also be used as a crucial part of retirement planning, but eight in 10 employers report that they believe their employees view the accounts mainly as near-term spending accounts rather than long-term retirement savings vehicles.
While employers believe financial wellness programs should have a role in the workplace, they do not appear to be a priority for job hunters. “We do not hear our clients—from start-ups to Fortune 1000 firms—say candidates are shopping job offers based on benefits,” explains Michael Case Smith, Managing Director with Edge 401k Funds, in an email statement. “What we anticipate in the future is a push to maximize benefits once employees are on board with ancillary tools and services: benefits ‘hamburger helper’ if you will.”
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