Pension & Benefits News Employers consider providing short-term financial assistance to employees
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Thursday, March 5, 2020

Employers consider providing short-term financial assistance to employees

By Pension and Benefits Editorial Staff

Of the 43.6 percent employers expressing at least some interest in offering financial wellness programs, 28.2 percent offer employees an emergency fund/employee hardship assistance program as a financial wellness initiative, according to research from the Employee Benefit Research Institute (EBRI). The issue brief, Emergency-Fund-Focused Employers: Goals, Motivations and Challenges, found that an additional 15.3 percent said they intend to offer an emergency fund/employee hardship assistance program in the future.

According to the Federal Reserve, half of American families report having an emergency fund, and only 20.1 percent of American families had access to liquid savings of more than three months of their family income in the case of an emergency. The ability to cover short-term financial needs can have long-term financial consequences, and the establishment of an emergency savings fund to protect against financial emergencies is considered to be critical to overall financial health, EBRI noted.

Emergency-fund-focused employers were also more likely than all employer respondents to favor education-based financial wellbeing or debt assistance benefits to employees. These might include print or online education and resources for goal setting and saving. Just over 43 percent of emergency-fund-focused employers cited this approach to financial wellbeing or debt assistance benefits for employees, compared with 35.5 percent of all employer respondents. In contrast, emergency-fund-focused employers were less likely to favor product-based benefits, which could include insurance, retirement plans, or employee assistance programs, to fill this role.

“Programs that reflect employers’ interests in helping workers with emergency savings are still early in their development,” said Lori Lucas, president and CEO of EBRI. “While there’s clearly a lot of interest being expressed, many employers report that they are only beginning to explore some of the newer available financial wellness initiatives in this area, such as rainy day funds and payroll deduction accounts.”

Measuring success. Measuring the impact of these initiatives can be challenging. “There are sometimes inconsistencies between the reasons employers give for offering financial wellness initiatives and the means of measuring their results,” said Lucas. For instance, 44.4 percent of emergency-fund-focused employers cited improved overall worker satisfaction as a reason for offering financial wellness initiatives, but less than 30 percent cited that improved overall worker satisfaction would be used a measure of the success of the initiative, EBRI found. Likewise, increased employee productivity was cited as a program justification by 29.6 percent of employers, but employee productivity was used as a measure of success just 20.4 percent of the time.

There has also been attention given to other actions employers can take to better the financial position of employees. “Some have suggested that employers should concentrate on improving job quality and pay and not just on ways to make it easier for workers to save. It will be important to research the extent to which emergency savings help improves overall financial wellbeing vs. shifting the focus from retirement preparedness to current financial stability,” said Lucas.

SOURCE: www.ebri.org

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