Administration February 15, 2017

Courage, not Literacy, Key to Financial Wellness

Employees with a more favorable self-rating of their financial knowledge were more likely to use financial wellness tools given to them by their employers.
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Helping employees become more confident about engaging in financial matters—improving their financial courage—is more critical than employers providing benefits that focus solely on financial education, a survey from Mercer suggests.

The Inside Employees’ Minds financial wellness survey found that, irrespective of objective financial knowledge (employees’ actual level of financial knowledge), perceived financial literacy (employees’ subjective assessment of their financial knowledge) was a significant factor driving whether or not workers engage with financial planning resources. It also had a significant effect on overall sense of financial well-being.

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Those employees with a more favorable self-rating of their financial knowledge were more likely to engage with a financial adviser and seek guidance in improving their financial well-being. Confidence, therefore, likely has more bearing than actual financial acumen on a worker’s ability to improve his or her financial situation, Mercer concludes.

Employees who aren’t confident tend to default to employer provisions, which work on the average but may not be right for all individuals. Employees who lack confidence may be paralyzed by inertia and may fail to take even simple actions that could help. And individuals with low financial courage are likely to avoid financial discussions, particularly group discussions (since they’re not in their comfort zone), to avert potential embarrassment. 

NEXT: Taking small steps to improve financial courage

The survey results suggest that change is most likely to occur through small steps—that is, by making small financial decisions and building courage gradually. Traditional approaches (such as trying to build financial literacy by giving employees as much information as possible) are less likely to promote financial wellness than simply providing employees with tools that enable them to make good decisions and take action—on their own—without needing a high degree of financial literacy.

Mercer says effective approaches might include personalized, curated communication that points employees to the programs that best fit their situation. Employers can also leverage defaults—not just to get employees on a positive path, but to build courage. Finally, offering tools like budgeting and coaching, as well as benefits like student loan refinancing, credit management, non-retirement savings vehicles and income protection, can help employees manage their finances more holistically.

The survey also found that though financial wellness is impacted by a whole variety of factors it is a personal experience. Financial concerns are not consistent for any one group based on gender, age, income level or other factors. In addition, financial difficulties can occur at any level of income. As an example, some individuals with high Mercer Financial Wellness Index scores had household income below $25,000, and some individuals had lower Mercer Financial Wellness Index scores despite having household income exceeding $150,000.

Based on its survey findings, Mercer created a Financial Wellness Index and Financial Courage Index, which can be used by employers to assess their employee’s current state of financial wellness, as well as their financial courage. “Through this survey and the indices, employers have the chance to identify sub-groups or clusters within their organization, which in turn can help them to better assess how a financial wellness program should be directed within their organization for maximum positive impact,” Mercer says.

More information about the survey and the indices can be found here.

Compliance February 14, 2017

UC Regents Sued for Interference of Benefits

The lawsuit also contends the defendant or its employees “discriminated against and/or harassed plaintiff on the basis of her age and gender.”

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Layla Suscavage, a former employee of the University of California San Diego Health division, argues in a new lawsuit that she was “forced to resign” from her job because the university wanted to prevent her from accruing full retirement pension and health benefits.

At the time of her termination, the lawsuit contends, Suscavage had a vested “service credit” of having worked approximately 9.25 years with the University. “Had she reached 10 years of service, the plaintiff would have been entitled to additional (and substantial) retirement and healthcare benefits,” the compliant suggests.

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“Throughout her employment, plaintiff performed her job in a capable and competent manner and has been commended for doing so,” the lawsuit argues. “Plaintiff experienced a constructive termination from her employment effective on or around July of 2016. Plaintiff was placed on administrative leave and due to hostile work conditions (and lack of work) was forced to resign her position.”

The text of the complaint also alleges gender discrimination: “As Suscavage performed her job in a capable manner, and was commended for doing so, she is informed and believes that job performance had nothing to do with her termination. As such, she alleges that any assertion from UC Regents that she was terminated for cause, was pre-textual … Additionally, throughout her employment plaintiff alleges she experienced gender discrimination in that she received less pay than her male counterparts for performing the same, or significantly similar duties in her role with defendant.”

The compliant argues the university violated Section 510 of the Employee Retirement Income Security Act (ERISA), which stipulates “an employer may not take an adverse action against a participant or beneficiary for exercising any right to which she is entitled under the provisions of an employee benefit plan … for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan.”

“Plaintiff was terminated, at least in part, in order to interfere with her rights under defendant’s employee benefit plan,” the complaint alleges.  

The lawsuit goes on to suggest the defendant or its employees “discriminated against and/or harassed plaintiff on the basis of her age and gender … Plaintiff is over 40 years of age. Plaintiff believes and thereon alleges that her age and gender was a motivating factor in defendant’s decision to discriminate against her, pass over her for advancement and eventually led to her termination.”

Few details about the alleged discrimination are actually included in the complaint, which requests a jury trial, but to establish standing the plaintiff argues she has sustained injuries and damages “including but not limited to, loss of earnings and earning capacity; loss of career opportunities; loss of fringe and pension benefits; mental anguish, physical and emotional distress; humiliation and embarrassment; loss of professional reputation; and loss of the ordinary pleasures of everyday life, including the right to pursue the gainful employment of her choice.”

The full text of the complaint is available here. 

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