Borrowing from workplace wellness programs, plan sponsors may want to consider providing incentives to boost or start employees retirement savings. Most workplace 401(k) plan incentive programs use a raffle-type system enroll in the 401(k) plan and be entered in a draw for an iPad or a vacation day, for example but at least one vendor has launched a more comprehensive financial incentive program.
Buck Consultants recently launched SavIncent program aims to link financial education and activities to a companys retirement savings plan. Employees who complete various elements of the program completing a financial health assessment, enrolling in the 401(k) plan, or meeting with a financial adviser, for example are rewarded with employer contributions to their defined contribution account. Moreover, the employer contribution is not contingent on the employee making any contributions.
The program is perhaps an indication of a wider benefits trend the merging of health and financial benefits.
Health and wealth will merge together even more because theres just so much more burden on employees and so much more decision-making they need to do, says Liz Davidson, founder and CEO of Financial Finesse, adding employers are spending more money on retirement incentives.
We still see more of a raffle-type approach where an employer will say if you take the financial health assessment, well put your name in a random draw to receive a free month of rent or a mortgage payment, she says. That [approach] is still more common than actually paying employees, but we are seeing more and more companies providing incentives.
Also see: The year in retirement
Bucks program speaks to retirement readiness concerns, addressing the fact that some people might not be in a position to save anything and so theyre not getting any benefit from the match the employer offers, explains Lori Block, a principal in the communication and client technology engagement practice with Buck Consultants at Xerox. It also by encouraging people to participate in these activities helps them to learn more about finances and saving and investing and makes them a bit more financially savvy and hopefully puts them on a path to where they might be able to start making their own contributions to their retirement savings.
While the program is still being rolled out, employer interest is high, says Block, with a lot of questions focused on the administration and compliance of the program.
There are definitely some things that have to be considered from a regulatory standpoint in how you set this up and weve looked at it from that perspective, says Block. Weve also considered implications around nondiscrimination testing and have developed different ways to ensure this program doesnt impact a plans testing.
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