Last week we wrote about HR’s role in employee wellbeing, workplace stress, mental health issues, and an integrated approach to treating the body and mind. This week, we focus on financial wellbeing and how HR leaders can help employees.
Today, the idea of wellness includes physical and mental health and financial wellness. How employees feel about their financial wellness and how their employers address it is essential to a healthy work environment since financial issues often impact work performance. Financial wellness means more than just offering a 401(k) plan to employees; it means addressing the issues around financial insecurity now and retirement savings insecurity later.
Rising inflation and poor economic conditions have impacted many employees’ abilities to meet their day-to-day financial obligations. A recent PwC Survey found that:
- Two out of five full-time employees said their top financial pressure is that everything costs more.
- Only 42% said their compensation is keeping up with the rising cost of living expenses.
- One in four full-time employees is working more jobs than in previous years to make ends meet.
- 56% are stressed about their finances.
- Financially-stressed employees are three times as likely to feel a big negative impact from money worries.
Source: 2022 PwC Employee Financial Wellness Survey, PwC.
When employees are financially stressed, they may save less in their 401(k), borrow from their 401(k), or prematurely withdraw funds and not replace them, reducing their retirement savings assets in the future. HR, along with retirement plan providers, must provide financial well-being programs and solutions to help address employees’ financial insecurity:
- Financial education centered on budgeting and debt reduction
- Retirement savings presentations that illustrate contributions and compounding rate of return work
- Tools and technology to make informed decisions about saving and spending and saving for retirement
- Resources to external programs to help employees with financial insecurity, such as housing assistance, childcare assistance, and other programs.
- Internal programs to address financial insecurity related to life events in the form of monetary grants.
When an employees’ financial wellbeing is good, they are less likely to feel stressed, miss work, and eventually leave their employer.
“Keeping in mind the high cost of employee turnover, including recruiting and training plus the loss of institutional knowledge, employers should show they care about employee financial well-being by promoting benefit programs that help employees stretch their money further. That includes student loan pay down plans; more than one-third of survey respondents who are currently looking for a new job have student loans. It also includes financial coaching focused on areas where people need immediate help like budgeting, paying down debt and building an emergency fund, as well as employer benefits that enable employees to access their pay more quickly without being subject to exorbitant fees and interest rates.” – 2022 PwC Employee Wellness Survey
Today’s employees have choices in who they work for and want more than just a paycheck- retirement savings plan with matching dollars, financial wellness programs and technology, and financial education.
Aspen HR can help implement financial wellbeing programs along with our partner Slavic401k, as part of your company’s benefits package through our white-glove service model approach. We design employee wellbeing programs to fit your needs and your employee’s expectations. Contact us to see how your company’s benefits benchmark against your industry.