Delta’s Emergency Savings Program Shows Retirement Security Dividends

Delta Air Lines has enhanced an emergency savings program for eligible employees, reducing the requirements enrolled workers must meet to earn up to $1,000 to seed an emergency savings account.

The emergency savings program—launched in January—was enhanced in the second quarter to provide greater flexibility, explains Josh Jessup, Delta’s general manager of human resources.

Changes to the program were approved during a mid-February presentation on the program to Delta CEO Ed Bastian, adds Jessup.

“Ed said, ‘We need to make the incentives available more quickly in the process,’” Jessup says. “The original design was three education segments that were each followed by a coaching session: education, coaching, education, coaching, education, coaching. Ed said, ‘That’s too much. We need to be able to get the incentive sooner.’”

In response, Jessup says, Delta “made some changes to front-load a little bit more education before the very first coaching session, and we made it so employees could receive their incentive after their first coaching session, instead of the three coaching sessions that are formally part of the program.”

The revisions also enabled Delta to “to try and streamline and simplify processes for employees a little bit,” he adds. The incentive is a $750 emergency savings contribution from the company.

Participants who contribute at least $250 in payroll deductions to their emergency savings account prior to completing the coaching requirement now have expedited access to both the $750 incentive and a $250 company match.

Delta designed and launched the program to provide a means for workers to save for financial emergencies, but also to improve workers’ retirement security.

“The educational aspects of this program are certainly having an impact, and that aligns with feedback that we’re getting from our employees as well,” Jessup says.

Several studies have shown a connection between workers’ retirement savings and access to emergency savings accounts. Employees with access to an emergency savings program are less likely to tap their 401(k) or retirement savings when they have a pressing or sudden financial need, according to research from Commonwealth and the Defined Contribution Institutional Investment Association.

“This can influence other financial areas like our 401(k) contributions in general and the number of people who would take loans [from the plan],” says Jessup. “Already we’ve seen great impact on employee contributions to their 401(k): … [more participants] in the program … have increased their 401(k) contributions than those who have not participated.”

Delta found that enrolled participants have increased their 401(k) deferrals: 23% of employees who completed the program have increased their 401(k) contribution percentage, as compared with just 10% of those who have not engaged in the program, according to a Delta representative.

Delta is now considering where in its workforce the program can be targeted to specific employee populations that may not participate at the same level as other cohorts, adds Jessup. Lower-wage employees will not be specifically targeted, he adds.

“We don’t see the emergency savings as an issue [solely] for lower-paid [workers],” Jessup says. “We see people who are [living] paycheck to paycheck at all levels of compensation.”

More than 45,000 workers have enrolled in the emergency savings program since it launched in January, 10s of millions of dollars have been contributed by enrolled participants and Delta has contributed more than $15 million through incentives, as of August 21, says Jessup.

“Our reservations division is an area where we have a high volume of newer employees and [an] area where we want to make sure that we’re making sure [workers are] familiar with our programs,” he says.

Delta hoped to achieve close to 20% participation in the program and for half of that group to receive the full $1,000 from the incentive and company match, he explains. “To date, we’ve had more like 45% of the population that has participated and, so far this year, 13% has earned the full $1,000, [and] about 15% has earned the $750.”

The emergency savings program is available to all U.S. employees below the director level—with at least six months of Delta service—including pilots. Participants can choose from three paths, based on their personal goals and finances, followed by individual coaching sessions from Fidelity Investments or Operation HOPE.