5 areas employers are expecting financial wellness programs to address
Interest in company financial wellness programs has spiked during the pandemic, a Prudential survey finds.
Employee demand for company financial wellness programs soared during the COVID-19 pandemic. Nearly three-fourths of retirement plan decision-makers reported increased interest, with employee usage climbing by 28 percent. Prudential’s 2020 Plan Sponsor Pulse Survey: Navigating COVID-19 asked nearly 700 decision-makers about their experiences.
“To have employees resoundingly turn to financial wellness resources serves as both confirmation of their value and an opening to build on this strong foundation,” said Harry Dalessio, head of institutional retirement plan services for Prudential Retirement. “As the pandemic has evolved, so have personal finances. Employers have an opportunity to meet the ongoing and changing needs that are surfacing.”
Survey results indicate that plan sponsors already were thinking along these lines. Although they reported being focused primarily on the immediate health and safety of their employees and the financial impact on the company, more than a quarter were planning to enhance their offerings in a variety of ways.
The pandemic is spurring consideration of improvements to plan design and expanded offerings. The top five areas they expect to address within their financial wellness programs are:
- Improve digital communications with employees (33 percent).
- Expand the definition of hardship to include disaster relief (31 percent).
- Ease the process for taking out hardship withdrawals (28 percent).
- Add a new financial wellness program (27 percent).
- Add an in-plan retirement income option (25 percent).
Slightly less than one-fourth also are considering adding an emergency savings option, expanding employer contributions and changing their fund lineup, including adding stable value as an option.
Those expecting to make no changes are clearly among the minority, at a mere 11 percent.
In addition to demonstrating opportunities to better tailor these programs to employee needs, insights from the survey point to financial wellness programs playing a role in calming nerves and mitigating hasty decision-making in reaction to market turbulence, Dalessio said.
Plan sponsors signaled that financial losses in employee retirement plans and the potential for delayed retirement of employees because of retirement plan leakage were not top of mind at that time.
These responses were consistent with Prudential’s own experience during the same time period. During the first three quarters of 2020, just 10 percent of Prudential clients’ plan participants took a hardship withdrawal, a coronavirus-related distribution or a loan, including a CARES Act loan.
“Having access to financial wellness resources, including education about budgeting, emergency savings and debt management, can help employees consider a range of alternatives rather than simply tapping their retirement plans,” Dalessio said. “This can deter workers from overreacting during a crisis, which can have a positive, long-term impact on their retirement security.”
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