Employee Benefit News and the Personal Financial Employee Education Foundation wish to help employers share benefit sponsorship information and core beliefs about financial education with a new survey and upcoming networking opportunities.
The initiative arises from concern over benefit snapshots such as data showing that 53% of employees are concerned about having enough money to make ends meet, with 40% living paycheck to paycheck and 30% having trouble paying their bills, according to the MetLife 9th Annual Study of Employee Benefit Trends. Such results show that a large number of employees are uncomfortable with their financial situation, increasing their stress levels.
Stress from debt can cause a variety of health problems from relatively minor issues, such as muscle tension to, in some cases, even heart attacks. A majority of employers report that financial concerns contribute to employee absence and thus, a loss of productivity. Unfortunately, many employees have not yet recovered from the great recession, with 80% of them reporting more financial challenges than five years ago.
At the same time, with the decline of defined benefit plans and the rise of employer 401(k)s, employees must take greater responsibility for financial security in their retirement years. While it’s true that many employers provide financial information and often, education, about 401(k) plan investments, many employees are having trouble paying their bills and therefore do not believe they have the ability to make 401(k) contributions.
Because employees with lower salaries are more likely to participate in the financial education offerings and then have the money available to set aside to enroll in the 401(k) plan, the workplace financial education helps employers comply with fiduciary responsibilities under ERISA. These responsibilities include the requirement that the percentage of those benefiting from the plan making less than $100,000 must be at least 70% of the percentage of those whose salary is greater than that amount.
While there has been growing employer interest in providing financial education benefits, cost concerns still arise as a barrier. Still, PFEEF has been able to show that increased financial wellness enables fewer employee absences, reduced health care costs, and greater participation in flexible spending accounts. The Federal Reserve of Kansas City also found that workers who had participated in a financial education program put aside more money in flexible spending accounts.
In addition to improvements in workplace outcomes, such as reduced absenteeism and increased 401(k) participation, researchers also have reported positive outcomes for employees themselves. Participants say they have put education into practice through improved financial behaviors, such as paying bills on time, adhering to a weekly or monthly budget, and building personal savings. Such improvements in personal financial knowledge and practices contribute to the reported increases in perceived financial wellness of employees, which in turn supports their overall well-being.
Many options exist for employers who decide to offer financial education as an employee benefit. To shed more light on the prevalence of various options, and the thinking behind them, EBN and PFEEF ask you to complete a short survey (approximately 6-8 minutes). Results will be reported by EBN and examined at the Financial Wellness at Work pre-conference on Sept. 9, 2012, prior to Benefits Forum & Expo in Phoenix.
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