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Boost Your Employees' Financial Wellbeing With These 7 Steps

Organizations can use many different programs and strategies to help workers enhance their financial wellbeing. The challenge is deciding which ones will have the most impact on the financial issues facing employees – from student loan debt to retirement savings.

Even as organizations increasingly commit to financial wellbeing strategies, employees are still feeling the strain. Almost a third of employees[1] have put off medical procedures because of finances, and 37 percent say that their finances have negatively affected their emotional wellbeing. As employers plan for uncertainty, forward-thinking HR leaders should consider seven concrete ways that they can boost employees’ financial wellbeing.



Identify the Most Significant Gaps

Review where you are to understand where you’re going. That starts by looking at how employees use health and wealth benefits. Are certain groups taking out retirement plan loans more than others? Do employees struggle with student loan debt? Are employees taking advantage of options like health savings accounts (HSAs)?

Answers to these questions can be found by conducting employee surveys and focus groups. From there, you can see what employees want and what benefits they value. It is also helpful to discuss with leadership how financial wellbeing fits into your overall rewards strategy or employee value proposition.

Employers often overlook their vendors as a partner in collecting data to identify workforce financial wellbeing challenges. Retirement plan recordkeepers and third-party administrators can provide organizations with benefits data, allowing you to analyze the aggregated data across programs to understand employees' current challenges better.



Review Best Practices

To discover what is specifically affecting the financial wellbeing of your workforce, analyze the data and benchmark it against industry best practices. In the retirement space, Aon has found that retirement readiness varies significantly by industry.[2] For example, a technology company may lack a robust retirement plan but instead offer generous stock options. The nuances of how industries structure total compensation will affect overall financial wellbeing.

Another reason to benchmark your programs against your peers is to understand if you need to make enhancements to remain competitive. For example, a financial planning benefit that is highly prevalent with peers could be implemented to meet employees' needs.



Target Your Financial Wellbeing Messages

Employers should strive to make communication timely, personalized and actionable. For example, you could remind employees to save more for retirement with messages around the time they receive pay raises, which would be timely. Including a notice of how close they are to reaching their retirement goals makes it personalized. And including a link to adjust plan contributions if necessary would be actionable.

Use data to understand and segment an organization’s employee population. Customized visuals, infographics and videos help engage key employee groups based on demographics and specific financial wellbeing needs.

Choose the appropriate communication modality for each segmented message. For example, e-mail and online seminars may be ideal for some workers but may not appeal to workers who are not at a desk all day.



Embrace Innovation and Outsourcing

The retirement benefits landscape is changing rapidly. Organizations can revolutionize their retirement plan offering with a pooled employer plan (PEP).

Created by the SECURE Act of 2019, PEPs allow companies to come together and jointly deliver retirement benefits. The law also makes it easier for retirement plans to offer lifetime income options. These investments can reframe the financial wellbeing decisions employees make because plans are required to project retirement savings not only as a lump sum but also as a monthly income stream. The SECURE Act also removed regulatory barriers, such as the common nexus requirement and one-bad-apple rule, allowing employers that otherwise couldn’t participate in a PEP to offer these retirement benefits.

The scale of a PEP enables it to provide employees with best-in-class features, such as lifetime income options and automatic enrollment and escalation. These can dramatically improve retirement readiness. A PEP allows smaller sponsors of retirement plans to access these features.

The efficiencies generated by employers working together through a PEP provide employees access to investment options with lower fees, leading to larger projected retirement savings. The PEP also creates a purposeful investment menu that can drive overall retirement outcomes better than traditional 401(k) plans that have cobbled together investment options over time.

Pooled employer plans are the next evolution in retirement benefits and may transform the marketplace similar to how 401(k)s reshaped the retirement landscape decades ago. With a PEP, employers can outsource day-to-day administration. They can also offload a large part of the fiduciary risk of providing retirement benefits.

Retirement benefits aren’t the only area where employers can innovate and outsource. Aon Local Advantage (ALA) can keep healthcare costs down and help employees find the right type of plans that they appreciate and value. ALA brings local companies the scale of our national health and benefits resources like strategy and design, vendor management, employee benefits communication and administration. ALA combined with the Aon PEP can provide employers with an integrated solution to improve employees' financial wellbeing outcomes. Ultimately, these services can ease the burden on HR departments so they can focus on more strategic priorities.



Link Health and Wealth Benefits Through Education

It can be difficult for employees to strike the right balance between retirement savings and health benefits. More education and tools can help. For example, employers have an opportunity to show workers how health savings accounts (HSAs) can be used in conjunction with a high-deductible health plan to increase retirement readiness. Employers can design recommended HSA contributions to help employees understand their health and wellbeing savings options.

Financial wellbeing is part of overall wellbeing. People with financial stress tend to have physical or emotional wellbeing issues as well. Treating financial wellbeing as a part of the holistic benefits package can help to address root causes and improve overall employee wellbeing.



Leverage Your Vendors

If employers sponsor retirement plans, your recordkeepers and other vendors may provide tools to help participants access their budget, savings, debt, credit and retirement goals.

Many vendors provide financial wellbeing benefits that come at no cost to employers, or they may have preferred pricing partnerships with outside vendors. For example, student loan refinancing may be an appropriate solution for organizations with a population of younger workers and can typically be provided at no cost to employers.

Employers should vet vendor resources and integrate their offerings into a cohesive financial wellbeing program. If an employer were to provide student loan refinancing to workers, have education available about the trade-offs of refinancing versus federal student loan protections..



Design Integrated Financial Wellbeing Programs

Health and wealth benefits can be overwhelming and confusing to employees. The integration of these benefits helps employees understand and appreciate what their employers provide. You may be tempted to introduce another point solution to address financial wellbeing into the mix. But without an overall benefits strategy, such additions can be counterproductive.

A more flexible and integrated approach to benefits can provide additional financial wellbeing. A thoughtful and comprehensive program that considers how employees behave from the beginning of their careers through their retirement can drive meaningful results that will improve lives and enhance productivity and engagement.


The Four P’s of Financial Wellbeing

Employers can break financial wellbeing into distinct categories to better assess their overall strategy based on the four Ps:

Prepare: It’s the most basic level of financial wellbeing, focused on short-term financial issues. In this category, employers should focus on providing financial education and tools to help with budgeting, savings, student loans and credit card debt.

Plan: The most comprehensive area of financial wellbeing, focused on long-term financial issues. Here employees may need guidance, advice and coaching to save for retirement, healthcare and education for their children.

Protect: Employees often overlook this area. It’s about making sure they have the insurance coverages that minimize the damage from loss of income, critical illness, disability and other risks.

Preserve: To improve retirement readiness, organizations should consider how employees can make their retirement savings last for their lifetime. This can be done through lifetime income solutions, education on Social Security benefits and support for estate planning.

[1] 2021 Employee Financial Wellbeing and Defined Contribution Survey Report

[2] The Real Deal - 2018 Retirement Income Adequacy Study, 2018

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This publication contains general information only and is intended to provide an overview of coverages. The information is not intended to constitute legal or other professional advice. Please refer to insurer’s policy wordings for actual terms, conditions, exclusions and limitations on coverage that may apply. For more specific information on how we can assist, please contact Aon.