Major Savings Barriers Include Benefits Language, Financial Stress

While many workers feel positive about the benefits offered to them in the workplace—from medical insurance to retirement savings—a majority of employers face challenges educating participants about their benefits, according to a recent report. 

A two-thirds majority of employers (68%) said workers underutilize the services, benefits and programs available to them, according to The Hartford Financial Services Group Inc.’s 2023 “Future of Benefits Report,” which surveyed 500 employers and 1,100 U.S. workers. 

In the report, The Hartford argued that there is a distinct need for better benefits education and resources to support workers’ overall wellness.  

Communications Barrier 

Even though 92% of employers surveyed said it is important to help employees realize that benefits offered are applicable to them, younger workers often feel that certain benefits offered are not meant for them. For instance, 62% of Generation Z respondents said they felt long-term disability insurance was not meant for them. 

In addition, 57% of employers said educating workers about benefits is a challenge. That number, however, is down from 76% of employers in 2022, which the report attributed partly to challenges communicating with employees during the COVID-19 pandemic.  

The report also found that many employees feel the complex wording used to describe benefits is a barrier to employees fully understanding what is available to them. For example, 38% of workers said the names and descriptions of employee benefits are confusing, and 61% of employers agreed that the names and descriptions used to identify employee benefits can be confusing to workers. 

In the same vein, 49% of employers said they believe their employees do not understand the supplemental benefits offered by the company and what those benefits cover. Supplemental benefits are additional insurance plans offered by the employer, such as short-term disability insurance or accident insurance.  

Some 42% of surveyed workers expressed support for improved resources to help them understand their benefits, and The Hartford report recommended that plan sponsors use storytelling techniques to demonstrate how specific benefits are relevant to an employee’s unique lifestyle. In addition, the report encourages workers to re-evaluate their benefit options each year, as changes in their life circumstances may alter what benefits they need.  

Megan Yost, a senior vice president and engagement strategist at San Francisco-based HR and benefits communication firm Segal Benz, previously told PLANSPONSOR that one of the best ways for plan sponsors to build trust with employees is to “be direct and communicate frequently.” In the absence of communication, Yost said participants sometimes create their own stories about what might be happening in the organization. 

Financial Stress and Mental Health 

Workers consumed by their own financial stress may also require more education from plan sponsors on how to better plan for retirement, manage debt and establish a savings plan. 

In The Hartford’s survey, 23% of workers said they feel very stressed when thinking about their household finances, and 16% said they feel extremely stressed. The latter had the highest rate among Millennials (38%), compared to Generation X (31%), Baby Boomers (29%) and Generation Z (28%), in this survey.  

Additionally, 30% of all workers said financial health always or almost always affects their productivity at work. 

Other evidence of the impact stress has on work came in a survey released Tuesday by Financial Finesse, a provider of workplace financial wellness coaching programs. “Workplace Financial Wellness in America” found that the number of employees reporting unmanageable financial stress climbed 34% in 2022, fueled by workers’ concerns about both the U.S. economy and their ability to maintain control over their financial situations.  

The report was based on responses from 34,168 employees who interacted with Aimee, Financial Finesse’s artificial intelligence-powered virtual financial coach, between April 1, 2021 and December 31, 2022. 

Single parents reported experiencing unmanageable financial stress most frequently (57%), followed by single adults with no children (28%) and married parents (23%).  

However, employees who engaged with any kind of financial coaching had a higher rate of accomplishing certain goals, according to Financial Finesse. For example, 89% of employees who adjusted their spending to save more for retirement are now saving enough to receive their employers’ full retirement match.  

In terms of financial education, a majority of workers (57%) in The Hartford’s survey said they would most welcome education on retirement planning. More than one-third of workers also said they were most likely to look for financial advice resources from their employers when planning for retirement.  

The Hartford also advised plan sponsors to educate workers about how certain employee benefits can help protect employees’ paychecks when they are faced with an unexpected illness or any sort of emergency. 

“Demonstrate to your workforce that you care about their overall wellness and foster a work environment in which workers feel comfortable seeking help when needed,” the report stated.  

The Hartford’s study was conducted between February 14 and February 28. The survey was completed by HR professionals who manage/decide employee benefits at the employers’ firms, and the workers surveyed were actively employed.