Natixis Global Asset Management is offering a new benefit that it hopes will allow more employees to begin saving for retirement instead of spending all of their extra money paying off student loan debt.
The company announced it will pay up to $10,000 of an employee’s student loan debt. Natixis will contribute $5,000 to every full-time employee who has been at Natixis for at least five years and has outstanding federal Stafford or Perkins loans. Eligible employees will also have the opportunity to earn an additional $1,000 each year over the next five years, toward their student loans, if they remain with the company.
Also see: “Student loan debt hindering retirement savings.”
Natixis got the idea from an employee survey it conducts every year, says Ed Farrington, executive vice president, retirement at Boston-based Natixis. The company wanted to know what the major barriers were to participating in a workplace retirement plan.
“In our most recent survey it became clear that millennials who were not participating in the plan were citing student loan debt as their primary barrier to participating in the plan,” he says.
Recently, Farrington spoke to juniors and seniors at his alma mater, the University of New Hampshire, about the U.S. retirement system. After the speech, a young man approached him to say that it was great that companies were offering so many different benefits but “one of the things on all of our minds is we all have student loan debt. It would be cool if firms could help with that,” he says.
That led to deeper conversations. Of the students graduating from college today, seven out of 10 of them are coming out of school with an average of $29,000 in debt.
“It is a real problem,” says Farrington. “So we wanted to do what we could to create a benefit that specifically helped them focus on their student loan burden. One of the goals is that it helps them create better financial behaviors in other parts of their life. Paying off that student debt as soon as they can will help them have better behaviors in the rest of their life.”
The program launches Jan. 1, 2016.
Farrington expects that all employees will want to avail themselves of the program if they are carrying debt.
“Student loan debt is a very personal thing for folks. When you talk about the issue, it is visceral. They really are connected to it,” he says.
The company has 525 employees.
Even though millennials are swimming in student loan debt, there was some positive information that came out of the company’s employee survey. Those millennials who participate in their workplace retirement plan start participating at an average age of 23. Generation X employees didn’t start saving until they were in their late 20s or 30s, he says.
“We have the propensity to think of millennials as digital, but one of the things we are starting to realize is they are good at saving. My sense is that they have grown up in a defined contribution world, a 401(k) world. They did not have the promise of a defined benefit plan. They have grown up in a world where there is a lot of conversation around Social Security and policy. They are acutely aware they are going to have to take personal responsibility for their savings,” Farrington says.
Paula Aven Gladych is a freelance writer based in Denver.
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