The Benefits Challenge

Filling The Gap Between Employer Actions And Employee Perceptions

There are opportunities for continued engagement as as many remain focused on retirement readiness

A new survey conducted by TIAA shows that while many employers are increasing focus on improving employee’s financial wellness, few employees actually feel the increased focus. Access full survey here.

NEW YORK December 18, 2020 – The COVID-19 pandemic has dramatically increased employers’ focus on employee physical and financial health yet has also created gaps between their perceptions about the benefits employees need and their employees’ expectations.

Sixty-nine percent of employers say they have increased their focus on improving employees’ financial wellness during the pandemic, but just one-third of employees feel the increased focus and only one in four feels their employer has increased their focus on helping employees with their retirement preparedness, according to TIAA’s Retirement Insights Survey.

The survey of more than 1,500 employers and employees highlighted opportunities for employers to continue their engagement on a variety of financial literacy topics in the year ahead. While a majority of employers (74 percent) report they are still actively focused on helping their employees save for retirement, employees are also looking for support in other areas of financial planning and see significant value in programs that offer guaranteed lifetime income in retirement (72 percent), budgeting tools to help analyze spending behavior (60 percent), one-on-one financial wellness coaching (61 percent), health savings accounts (56 percent), and debt counseling (49 percent).

“Many employers are more focused on the immediate financial impact of the pandemic on their employees, but it’s important that they look at short and long term challenges as interconnected,” said Snezana Zlatar, Head of Financial Wellness Advice and Innovation at TIAA. “Addressing shorter-term challenges such as budgeting and managing debt can be critical to helping employees achieve long-term retirement preparedness, and employers have an opportunity to provide meaningful support across a variety of financial topics that can enhance employees’ financial stability.”

Other key findings from the survey include:

  • A majority (82 percent) of employers have increased their focus on health and safety amid the pandemic, and seventy-five percent of employees recognize this increased attention.
  • Despite the shift in focus this year, nearly three-quarters of employers say they feel responsible for their employees’ financial wellness, and 73 percent still see saving for retirement as a top contributor to employees’ overall financial wellness.
  • In terms of concerns, employees and employers are in sync about the risk of not saving enough and outliving one’s retirement savings: Roughly six in ten of both groups look at these issues with apprehension.
  • Employers see rising healthcare costs as the biggest issue for attaining financial security in retirement, with 86 percent saying it is a very or somewhat significant issue.
  • When compared with the 2018 TIAA Plan Sponsor Retirement Survey, employers are now more concerned about early withdrawal and loan penalties (61 percent, up from 42 percent in 2018) and investment diversification (50 percent, up from 27 percent), signaling that they may be more focused on the immediate financial impact of the pandemic on their employee’s retirement savings over longer-term savings goals.

 

The survey suggests that employees are also interested in nearly all types of financial education or resources that their employer might offer, with nearly three-quarters saying they’d like more information about their retirement plan and retirement savings in general. While employers recognize the benefits of pre-retirement planning programs (75 percent), and educational resources regarding personal finance (73 percent), 74 percent also said helping employees save for retirement is an area where they say they could use the most assistance, followed by debt management and debt counseling (44 percent).

 

 

Excerpts From The TIAA Retirement Insights

The COVID-19 crisis has dramatically increased sponsor focus on both the physical health and safety of employees and their financial health. 82% of employers say they have an increased focus on the health and safety of employees, 69% have a greater focus on improving financial wellness, and 60% say the same about retirement preparedness. Yet while employees recognize the newfound attention to health, only a third say this is the case for financial wellness and only 1 in 4 say this for retirement preparedness.

Many employers are more focused on the immediate financial impact of the pandemic on their employees, but it’s important that they look at short and long term challenges as interconnected...

Saving for retirement is the top financial goal of all employees, with 64% considering it a major financial goal of theirs, presenting opportunities for employers to enhance financial literacy and retirement savings offerings. Saving for retirement is viewed as a significant contributor to financial wellness, with 40% of employers citing it as the top contributor. But, only about half of those under 40 consider it a major goal. Instead, younger employees face a variety of financial obligations and priorities that compete for space with their desire to save for retirement. This presents an opportunity for employers to increase their engagement on a variety of financial literacy topics to help employees balance short-term needs with longer term goals, ultimately improving employees’ retirement readiness.

Concern among employers about early withdrawal/loan penalties and a lack of diversification hurting employees has massively increased in 2020 vs. 2018. 61% of employers are concerned about early withdrawal/loan penalties this year (up from 42% in 2018) and 50% say the same thing about insufficient diversification (up from 27%), highlighting worries specific to this year in crisis. The heightened short-term concerns are understandable, but the slippage of longer-term concerns could be problematic if it represents less emphasis being placed on addressing those concerns.