Addressing Employees’ Financial Wellness DC Plan Sponsors’ Top Priority in 2019

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%).