Retirement planning: ‘Top priority’ in retention, say 99% of HR leaders

Employees need and want incentives beyond their bi-weekly paychecks. A new Morgan Stanley at Work Annual State of the Workplace III Study says that financial benefits drive retention and engagement. This is a result from things like market uncertainty and inflation. The added financial stress is driving employees to get more from workplace financial benefits, which include equity compensation, financial wellness and retirement preparation.

For example, the report shows that 89% of employees agree they would be more invested in staying at their company if it provided financial benefits that met their needs. And, most HR leaders (90%) are worried that their employees would leave if their company did not provide benefits that met employee needs.

“Economic instability has led both employers and employees to tighten their belts—and ask a lot of their workplace benefits in the process,” said Brian McDonald, Head of Morgan Stanley at Work. “We’re seeing momentum on both the employer and employee side to engage more intelligently with financial benefits as a ballast against uncertainty. To meet this moment, companies are going to have to get even more creative and efficient in leveraging holistic benefits offerings to attract, retain, and motivate their employees.”

Related: Financial stress weighing on your workers? Prioritize financial wellness training

Also, employees are paying closer attention to financial benefits, and employers are taking notice. Nearly 69% of employees say they are paying more attention to reviewing their financial benefits in 2023, up nine percentage points from last year. Similarly, more HR leaders increasingly expect their employees to pay more attention to their benefits (86%).

Unfortunately, employees and employers seem to be at odds over expectations around financial benefits, with more employees requesting benefits that their company does not offer (88% vs. 78% in 2021). And one in four HR leaders shared that they are cutting back on employee financial benefits to prepare for a recession.

Both employees (95%) and HR leaders (98%) agree that employers should offer the best employee benefits available in their industry. In looking ahead, most employees (89%) and HR leaders (97%) agree that their company needs to do a better job providing resources to maximize the financial benefits offered to them.

Nearly three in five employees rank retirement planning assistance from financial professional as a high priority when choosing where to work – including 25% who say it’s their top priority.

“Employees want and need greater support when it comes to long-term retirement planning, and while we’re seeing financial guidance being recognized as a priority for HR leaders, there is still more employers can do to support and retain talent,” said Anthony Bunnell, Head of Retirement Solutions and Deferred Compensation at Morgan Stanley at Work. “These are the times when plan advisors shine by lending seasoned expertise and a steady hand to help ensure employee finances and investments are well positioned to weather whatever economic and market conditions may come our way.”

Demand for retirement planning assistance grew compared to last year, with employees choosing goals-based retirement investment planning, access to a financial advisor, and access to retirement planning tools and calculators as the most beneficial. Most (99%) HR leaders say providing retirement planning assistance is a priority in retaining current employees.