Sixty-six percent of sponsors of multiemployer plans say the
Multiemployer Pension Reform Act (MPRA) of 2014, which was passed on December
13, 2014 to help troubled multiemployer plans from becoming insolvent, will be somewhat,
very or extremely helpful. This is according to a survey of 216 multiemployer
plans that the International Foundation of Employee Benefit Plans conducted in
May.
Eighty-one percent say that the Pension Benefit Guaranty
Corporation (PBGC) premium increase from $12 per participant in 2014 to $26 in
2015 will be somewhat, very or extremely impactful. The law also allows deeply
troubled multiemployer plans to temporarily or permanently suspend current and
future benefits, and allows the PBGC to facilitate multiemployer plan mergers
and to order and finance plan partitions.
Ninety-two percent of multiemployer plans have been closely
monitoring the law, 96% have begun discussions on the potential impact, and 88%
say they have a good understanding of the MPRA provisions.
Among the funds responding to the survey, 63% are in the
green safe zone—but 37% are in potential trouble, with 16% in the endangered
yellow zone, 1% in the seriously endangered orange zone, 14% in the critical
status red zone and 6% in the critical and declining status zone.
MPRA permits funds in the critical and declining status zone
to temporarily or permanently reduce current and future benefits. The International
Foundation of Employee Benefit Plans survey found that 3% of multiemployer
plans are interested in applying for this action. Another 5% are considering merging
with better-funded plans, and 2% are thinking about adopting flexible tools to
address funding challenges.
“Half of funds report that they have received questions from their participants
expressing concern about the law,” says Julie Stich, director of research at
the International Foundation of Employee Benefit Plans. “Going forward, plan
sponsors will be closely watching the developments surrounding MPRA and
continually evaluating their plan to ensure the best interests of their plan
participants.”
The full results of International Foundation of Employee
Benefit Plans’ survey of multiemployer plans can be viewed here.
Financial wellness programs are gaining traction among
employers and are sorely needed, Alliant Credit Union says in a new white paper
titled, “Financial Wellness in the Workplace 2015.” The paper is based on
a survey of 408 human resources (HR) executives at companies with more than
1,000 employees, conducted in January, 2015, as well as a survey of 1,007
workers between the ages of 18 and 64, conducted in September, 2014. In
addition, it spells out best practices for establishing a financial wellness
program.
Forty percent of companies now offer financial wellness
programs, Alliant found. The reason why they are embracing these programs,
Alliance says, is “businesses realize that helping their employees achieve and
maintain financial well-being is a win-win for their people and their
organizations. Financial stress has a significant impact on both the physical
well-being of employees and their workplace productivity. This realization has
led many HR executives to regard a financial wellness program as not only
compassionate for employees, but as a sound investment for the company.”
The most common component of a financial wellness program is
retirement planning, cited by 65% of HR executives. This is followed by
medical and health care cost-planning programs (52%), confidential employee
self-assessment of their finances (44%), tracking tools for goal attainment
(41%), investment planning programs (38%), customized financial education
(35%), incentives or rewards for participation (34%), fraud protection advice
(27%), saving for college programs (26%), managing debt programs (23%) and
education on day-to-day budgeting (22%).
These programs are greatly needed by workers, Alliant says,
as 20% of Americans today smoke, 30% are obese—but 70% are seriously concerned
about their finances, and 78% are deeply worried about the direction of the
economy.
NEXT: Workers’ financial worries
Citing a survey by the National Foundation for Credit
Counseling, Alliant notes that only 28% of Americans say they are financially
fit. More than three-quarters, 76%, live paycheck to paycheck. Forty-four
percent don’t have even $2,000 set aside in an emergency fund, 33% are not
saving anything each month, 30% save less than $100 a month, 36% are not
contributing to a retirement savings plan, 46% spend two to three hours of
company time each week dealing with their personal finances, and 79% say their
financial worries keep them up at night.
“With workers reporting financial problems as their chief
cause of stress, the need for financial wellness programs is both a physical
and a fiscal imperative,” Alliant says.
Employers can definitely reap the benefits of such a
program, the credit union says. The Consumer Financial Protection Bureau found
in 2014 that companies enjoy a return of up to $3 for every $1 they spend on
financial wellness programs. This return on investment occurs due to increased
productivity, less sick leave taken and reduced disability and workers compensation
claims.
In its survey of HR executives, Alliant asked how their financial wellness
program had improved their bottom lines. Forty-three percent said it increased
employee engagement, 40% said it boosted productivity, 40% said it provided
education for employees’ goals, 36% said it reduced employees’ financial
stress, and 23% said it alleviated employee absenteeism.
And employees want a financial wellness program, Alliant
notes, citing a Gallup poll that found that more than 80% say they would
participate in a financial wellness program if their employer offered it, 67%
of employees think they lack the knowledge to make sound financial decisions, and
40% want help achieving financial security.
In its survey of employees, Alliant found they have a great
many financial goals, starting with building up an emergency savings fund,
cited by 58%. This is followed by: saving for retirement (cited by 55%), paying
off credit card debt (37%), saving for an automobile purchase (34%), improving
credit history (30%), saving for children’s education (24%), saving for a home
purchase (24%), staying afloat with debt obligations (22%), paying off student
loans (17%), financing their own education (8%) and saving for a recreational
vehicle purchase (7%).
NEXT: Best practices
when establishing a financial wellness program
Alliant concludes its white paper on financial wellness by
laying out some ground rules when setting up such a program. First, it recommends
that companies consult with an expert to help them address the specific needs
of the workforce. This is a critical component that most employers do not
consider, Alliant says. “Today, 63% of U.S. companies with a financial wellness
program offer financial education courses, but only 35% of them target the courses
to the specific needs of their workforce,” Alliant says.
This can be achieved by surveying employees to ask them
about their own economic situation and level of financial stress, Alliant says.
This needs to be done confidentially so that employees answer the questions
honestly, Alliant suggests.
“Once you have the aggregate results, work with your trusted
partner to develop a comprehensive strategy for the program—its objectives and
deliverables that address your employees’ needs,” Alliant says. “The program
should cover all aspects of financial wellness relevant to your employee
population, from debt management to more advanced wealth protection and estate
planning, based on the results of the aggregate assessment report. Programs
should not be one size fits all.”
And once the program is in place, employers should remember
to periodically survey participants on how well it is doing and make
adjustments accordingly.
Alliant Credit Union’s white paper on financial wellness
programs can be downloaded here.