Benefits forecast for 2026: Growing demand for retirement & financial well-being benefits
This massive growth will be fueled by a tight labor market and SECURE 2.0 government mandates – and 401(k)s among employers with less than 100 employees will have equaled coverage among employers of 100+ employees.
A tight labor market at least through year-end 2026 is likely to drive the growth of financial well-being benefits offered by employers competing for talent, according to a survey of workplace benefit professionals conducted by Transamerica.
Transamerica Prescience 2026 is a series of 10 polls and three discussion sessions being conducted over 12 months, each focusing on a particular aspect of employee benefits. The initial findings, which relate to employee financial wellness offerings, found that benefits that were unheard of just 5 years ago – such as cash assistance with the down payment toward the purchase of a first home, help with chores and adult care, and assistance with student debt – have become commonplace and employers will continue to leverage these types of benefits to attract and retain talent from a more diverse pool of employees.
“Greater workforce inclusion will necessarily promote flexibility in benefits and prompt employees to be more involved in benefits elections than in recent years,” said Wendy Daniels, head of customer experience and marketing for workplace solutions at Transamerica. “In this vein, experts raised questions about the coaching and assistance that should be available to help employees select their benefits. This is an area where technology may become more impactful. The Prescience panelists indicated that tools such as automated assistants could deliver benefits counseling to many employees at a low cost. Another potential benefit of AI the panelists mentioned is the ability to provide affordable assistance anywhere around the clock.”
High deductible health plans (HDHPs) are expected to become more prevalent, and nearly seven in 10 employers will offer Health Savings Accounts (HSAs) while about 40% will offer gap insurance for uncovered health care expenses, the experts predicted. The panelists also predicted 61% of employers will offer mortgage and rent assistance, 59% will offer credit improvement services, 56% will offer student loan repayment, 52% will offer critical illness co-insurance, 43% will offer emergency saving funds, 38% will allow employees to work from anywhere, 17% will extend health care benefits to executives and 13% will offer retiree medical coverage.
“Not all employers can offer all of these benefits,” noted Daniels. “Nevertheless, the ability – and willingness – to provide them will set employers apart in hiring and retaining top talent.”
The mainstay of workplace financial benefits – the defined contribution plan – will likely expand even further into the small business market over the next several years, according to the survey. DC plan coverage among smaller employers could catch up to that of larger companies – those with more than 100 employees – by year-end 2026, the Prescience experts predicted.
While nearly all larger employers already offer DC plans to employees today, less than half (46%) of smaller employers do so currently according to the 22nd Annual Transamerica Retirement Survey published last year. By 2026, 88% of all employers will offer DC plans, spurred by state mandates requiring employers to offer retirement plan coverage. At least 15 states already have crafted such mandates, including Oregon, which mandates coverage for employers with as few as five employees.
Related: Solo 401(k)s, SIMPLE IRAs and SEP IRAs: Choosing the right plan for a small business
Transamerica’s panelists were divided on the future of financial well-being indicators beyond retirement readiness. While just over half (53%) agree or strongly agree that most employers will have an economic well-being rewards program in place by year-end 2026, they have differing views on whether most employers will monitor the financial well-being of their workforce or rely on the well-being indexes provided by their employee benefits partners to check the economic well-being of their employees.
Panelists also thought that employees’ concern over the privacy of information needed to measure their financial wellness accurately will constrain use. Many employees may be reluctant to share information about their debt, personal wealth, other sources of income, and family members’ resources with their employer, the panelists noted.
“The first step is educating employees on what is available and helping them make the right decisions for themselves and their families. Making implementation easy is the second,” said Daniels. “As we move toward greater personalization of benefits, it will be even more critical to maintain a responsible choice architecture. We need to keep it simple for them to make appropriate selections while advising employees against regressing to inadequate retirement funding for the sake of freedom.”
Kristen Beckman is a freelance writer based in Colorado. She previously was a writer and editor for ALM’s Retirement Advisor magazine and LifeHealthPro online channel.