Data and Research August 2, 2018

Cash Incentives Boost Financial Wellness Program Performance

A report from Bank of America Merrill Lynch shows employees who do not feel financially well are most concerned about shorter-term financial goals, whereas employees who do feel financially well are most concerned about long-term goals.

Reported by

Bank of America Merrill Lynch published its 2018 Workplace Benefits Report, presenting a wide-ranging overview of the financial wellness of workers in the United States.  

According to the report, both employees and employers agree that financial wellness programs are effective at reducing financial stress. In fact, fully 91% of employees who participate in a workplace financial wellness program say these resources have been effective at helping them to reduce debt, increase savings or otherwise improve their financial outlook in at least one material way. This compares with the 95% of employers who offer such programs agreeing that their financial wellness program has been effective in reaching its own work force goals.

Get more!  Sign up for PLANSPONSOR newsletters.

Among the benefits of financial wellness programs cited by employers are greater employee satisfaction, lower employee turnover, improvements in productivity and even lower health care costs for the company. Thus, employers voice frustration that employee participation in voluntary financial wellness programs remains fairly low. According to the survey, while 48% of workers currently are offered a financial wellness program, just 31% of employees participate in these programs.

“The No. 1 way to increase participation, according to employers and employees, is to offer cash incentives or discounts to participants,” the report states. “Availability and the use of workplace financial wellness programs are not yet universal. Employers have significant room for improvement in increasing employee participation.”

Stepping back to define what financial wellness looks like, Bank of America Merrill Lynch says it sees financial wellness “as managing current finances while preparing for the future.”

“It is not about being wealthy, but being able to address short- and long-term financial goals,” the report suggests. “Those who feel like they are not doing financially well often bring financial stress to work, can be distracted on the job and have even reported negative health effects.”

The report shows employees cite a number of reasons for not taking charge of their financial wellness on their own. Many say they need help identifying appropriate goals, while others say they are already doing the best they can. Others say that thinking about finances is uncomfortable, or that they don’t know how to start, where to start or how to set priorities.

As employers might expect, the report shows employees who do not feel financially well are most concerned about shorter-term financial goals, whereas employees who do feel financially well are most concerned about long-term goals.

“Employee needs are not all the same,” the report warns. “The onus is on employers to make sure their financial wellness programs are designed to address a wide range of employee needs — not just planning for retirement.”

Compliance August 1, 2018

ERIC Tries to Reroute New York City Private-Sector Retirement Plan Proposal

ERIC asks that employers with ERISA plans be exempt from the city program—also that the city council change the program’s eligibility criteria.

Reported by

The ERISA [Employee Retirement Income Security Act] Industry Committee (ERIC) submitted comments to the New York City Council regarding a proposed bill that would establish a retirement savings program for private-sector employees.

In 2016, the Department of Labor (DOL) Employee Benefits Security Administration (EBSA) issued a final rule to assist large cities and other political subdivisions as they establish payroll deduction individual retirement account (IRA) savings programs for workers without access to workplace savings arrangements. New York City had expressed interest in providing such a program.

Never miss a story — sign up for PLANSPONSOR newsletters to keep up on the latest retirement plan benefits news.

ERIC says it supports state and municipal government proposals and programs designed to promote and facilitate retirement saving by workers without access to an employer retirement plan, but has concerns about how the proposed New York City program overlaps and contradicts ERISA.

ERIC’s comments focused on several aspects of the proposed bill that directly conflict with ERISA or place additional burdens on employers already providing retirement plans to their employees. Most important to ERIC members, who all offer ERISA-qualified retirement plans, is for an employer to be automatically exempt from the program if already providing an ERISA-compliant retirement plan. ERIC also asked the council to change the program eligibility criteria, so that it does not directly contradict current federal laws and regulations. Employers should be able to determine eligibility in a retirement plan under federal laws and not alter requirements based on state and local programs, ERIC says.

“For employers that already provide a retirement plan in compliance with federal ERISA law, it is important that they be able to design plans that work effectively and efficiently based on the needs of their work force and the industries in which they operate,” says Annette Guarisco Fildes, president and CEO of ERIC. “We strongly encourage the council to revise its proposal to ensure that no additional burdens are imposed on employers that are already providing a qualified retirement plan to employees. ERIC is willing to work with the council to provide recommendations, using current available data that will assist the program in determining which employers already provide a retirement plan.”

ERIC previously sued the Oregon Retirement Savings Board (ORSB) on ERISA pre-emption grounds over the employer reporting requirement that was imposed by Oregon’s state-run mandatory retirement plan, OregonSaves. That lawsuit was settled in March.

«