Money's fun to spend, so why shouldn't it be fun to save? That's the thinking behind SaverNation, a new cash-back program for 401(k) and other workplace retirement plan participants.
SaverNation partners with over 500 online retailers in the country. Employees sign up, make their regular online purchases, and the retailers offer anywhere from 1% to 25% cash back for the online purchases. SaverNation's technology automatically converts the cash back into extra contributions for the 401(k), 403(b), 457, IRA, Roth IRA or account of choice.
"We are the only program where people can continue to buy [online] from the places they normally buy and get cash back and have someone else basically give them the money into their retirement plan so they don't have to choose between spending and saving," says Marc Robinson, founder and CEO.
The program was designed to help people overcome the save-or-spend dilemma.
"In this era of cutbacks and layoffs, this is a no-cost opportunity to offer employees a hard-dollar compensation, a new employee benefit that doesn't cost the employer anything and is easy for employees to use," says Robinson. "And it goes right to the heart of one of the most difficult problems that people have in any workplace, which is saving for retirement."
Seven years in the making, SaverNation has the support of industry heavyweights Brian Graff, CEO and executive director of the American Society of Pension Professionals and Actuaries, and Dallas Salisbury, president of the Employee Benefits Research Institute. Other key players include ERISA attorney Bruce Ashton from Drinker Biddle & Reath LLP; Dan Maddux, executive director of the American Payroll Association; and John Fiore, retired executive vice president and former chief investment officer with Bank of New York Mellon and State Street.
"One of the things we're focused on here at ASPPA is trying to increase savings, particularly for moderate-income workers and this could be a great way of doing it," says Graff. "Here's a new employee benefit you can provide without any cost."
SaverNation configures its system to whichever payroll provider an employer is currently using. "Once a month, payroll has to take instructions from us about which employees have earned at least $5 of rewards and add that to the second deduction field, which the payroll system then combines and sends to the recordkeeper as a single source," says Robinson. "There's no burden for the recordkeeper or the plan administrator, and it's very little work for payroll."
SaverNation also provides marketing materials employers and brokers can distribute to employees.
Robinson believes employers can use the program to differentiate themselves from competitors. "Employees aren't going to say, 'What's your investment lineup?' or 'Who's your plan provider?' but how easy is it to say, 'We have this cash-back program'?" he says. "It's something employers can feel innovative about and [use] to differentiate themselves."
So far, about 200 employers are using the program. "It's been built from an authentic place to really make a difference in people's lives by having everybody do what they normally do," says Robinson. "The participants are buying what they normally buy, HR is doing what it normally does, [and] payroll does what it normally does."
The program is available to all employees, whether they're participating in the retirement plan or not. "If they're not participating in the plan, they'll get the cash back, but not the full benefit of the program," explains Robinson. "But that gives the adviser or broker or employer the chance to say, 'You're getting this money, you might as well join the plan; it's free money.'"
Brokers, meanwhile, can use the SaverNation program to boost revenue. "As we're driving assets into the plan, they're making basis points from that revenue," says Robinson. "For clients who they feel have maxed out on their current revenue, [brokers can] put this into the clients [they] already have and watch this incremental growth."
Plan design feature
SaverNation is a plan design feature that "snaps on" to a workplace retirement plan.
"There's a plan amendment that doesn't have to be filed anywhere except [in] the fiduciary filings [if employers want]," says Robinson. "Then you look at the plan document. Does the plan document allow for a fixed-dollar deferral or only percentage of pay? If it's only 'percentage of pay,' you check the box that says 'either one.' Then you look and see whether there's a monthly election amount rather than quarterly or annually. And if it's not monthly, you check that box and you're done."
SaverNation was recently recognized with a 2013 Bank Innovation Award from Bank Innovation, a customer experience blog for the banking industry.
Online shopping as a company perk
Another company hoping to cash in on people's love of online shopping is workpays.me, an online platform employers can offer as a voluntary benefit. Employees shop online and pay for their purchases through payroll deductions. The site offers access to roughly 50,000 everyday and luxury items - everything from $16 bottles of perfume to $6,000 televisions. Employees can pay for the items over the course of up to 12 months with no interest.
"We're really trying to create the Amazon experience, where you can come to our site and buy anything you're looking for," says Josh Verne, president and CEO.
Another perk? Workpays.me gives anywhere from 2% to 4% of total sales back to the employer as a charitable donation or to help fund wellness and retirement programs.
The system recognizes the employee's pay cycle and breaks down payments accordingly. Every time an item is added to the cart, the site shows the employee how much it will cost per pay cycle.
Until about three years ago, Verne worked in the furniture distribu-tion business. "When I was looking to add more benefits for employees that wouldn't cost us anything, we came up with the concept of being able to offer employees the ability to buy our furniture at no discount, but over four or six pay periods," he says. "When we sold the [furniture] business, it was my wife who said, 'Your employees used to love this benefit, why don't you look to do something like this?' And that's how we started the business."
Thirteen employers with an average group size of 6,000 employees are either already using the platform with employees or are slated to launch it soon.
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