Diversity & Inclusion

Financial Equity In The Workplace

New research uncovers how different employee communities think, feel and act when it comes to saving for retirement

New research from Voya Financial finds opportunities for employers to help improve financial outcomes for Black and Latino employees.

WINDSOR, Conn. April 25, 2023 — Voya Financial, Inc. (NYSE: VOYA), is releasing new research detailing how comprehensive diversity, equity and inclusion (DEI) initiatives can help close benefits and savings gaps to improve financial outcomes for Black/African American (Black) and Hispanic/Latino (Latino) workers. Further detailed in Voya’s new thought leadership paper: “Bringing greater financial equity to the workplace to support everyone’s opportunity for a better financial future,” (view here) the innovative DEI research analysis was conducted with Voya’s own plan sponsor clients to help employers deliver greater access and improved financial solutions for all their employees. Among many findings, Voya’s research found employers who implement inclusion best practices within their workplace retirement plan can see positive savings results that have a meaningful impact on underserved employee populations.

“Over the last several years, employers have increased their focus on driving greater inclusivity, which has led to positive outcomes in the recruitment and retention of a more diverse workforce,” said Rob Grubka, CEO, Workplace Solutions at Voya Financial. “Our research has found that employers can take this a step further by now focusing on opportunities to create greater value out of their benefits and savings programs by understanding and acting upon the unique needs of their employees. However, despite the efforts supported by many employers today to drive greater outcomes, the dimensions of a strong retirement plan, such as participation and savings rates that can drive these outcomes, still remain a challenge for many individuals today, particularly among certain employee communities.”

To help further understand what is driving the behaviors and ultimate actions of individuals when it comes to their workplace retirement plan, Voya analyzed plan participant data from six of Voya’s clients and more than 163,000 employees across various industries such as retail, financial services, government, consumer goods and utilities. The research focuses on key areas such as retirement plan participation, savings behaviors, and overall engagement in the plan.

Key Retirement Plan Measures Show Gaps Across Different Employee Communities

While many individuals have faced financial hardship over the past several years as a result of the impacts of the COVID-19 pandemic, Black and Latino workers in particular experienced greater pay cuts and job loss, leaving little room to consider retirement savings as a priority.[1]

What’s more, U.S. Census data from 2020 shows that Black Americans were twice as likely as White Americans to be living in poverty, with a median Black household earning just 61% of the median White household.[2]

With this as a backdrop, Voya’s research uncovered striking differences in overall workplace retirement plan participation, savings rates (measuring the amount of money an individual deducts from their paycheck to set aside for their workplace retirement plan) and average account balances among different employee communities. Specifically, Voya’s research found:

  • Participation rates: Employee participation rates were found at levels of just 53% (Black employees) and 45% (Latino employees) compared to higher averages of 66% (White employees) and 62% (Asian employees).
  • Savings rates: While overall a healthy savings rate of 8% exists across all employees, Voya’s research revealed savings rates among Black (7.1%) and Latino (6.9%) employees are still less than that of Asian (9.5%) and White (8.4%) employee populations.
  • Average account balances: Voya’s research continued to find disparities among different employee communities with White and Asian employee populations showing an average balance of $99,000 and $86,000, respectively; and $45,000 and $43,000 for Black and Latino employees, respectively.

“Clearing one’s path to financial confidence includes helping individuals save for retirement, and that starts with getting them to enroll in a plan — and our research shows that automatic retirement plan features can make a big and impactful difference,” added Grubka. “Features such as auto enrollment seemingly not only increase overall plan participation, but also show an opportunity to help close gaps among all employee populations. And while delivering financial best practices support through an inclusion lens takes effort and focus, the payoff can be transformative for underrepresented employees and their families.”

Over the last several years, employers have increased their focus on driving greater inclusivity, which has led to positive outcomes in the recruitment and retention of a more diverse workforce...

Automatic Plan Features Remain Supportive In Achieving Greater Outcomes For All

To further understand the opportunities employers have to support these savings disparities, Voya’s research also further examined the differences between employees who were subject to automatic plan features, including automatic plan enrollment. Through the detailed analysis, Voya found that while Black and Latino employees have lower plan participation rates, the gap closes significantly in plans that offer automatic enrollment where Black and Latino employees have a two to three times higher participation rate compared to their peers at employers who do not offer automatic enrollment. Specifically, employer plans that do not automatically enroll employees into their workplace retirement plan haveactive participation rates of 49% (White employees), 46% (Asian employees), 34% (Latino employees), and 31% (Black employees). In comparison, those plans that do automatically enroll employees show far greater active participation rates of 92% (Asian employees), 90% (White employees), 88% (Latino employees), and 87% (Black employees).

“At Voya, we have a clear purpose: Together we fight for everyone’s opportunity for a better financial future. And supporting everyone involves recognizing that we all have unique backgrounds and goals, particularly when it comes to our workplace benefits and savings needs,” added Tom Armstrong, VP, customer analytics and insight, head of the Behavioral Finance Institute for Innovation. “Through this research, we look forward to being able to act on our purpose by providing actionable solutions for employers to overcome the most recognized challenges and turn those into strategic focus areas to help improve outcomes.”

Among retirement plan health, Voya’s research further analyzed differences among digital engagement and opportunities for more emergency savings support. While automatic enrollment provides one clear opportunity for employers today, there are many proven action steps plan sponsors can take to help narrow the retirement savings gaps experienced by different employee populations. For more information, and to view more detailed findings of Voya’s research, please visit the Voya Perspectives Paper – Financial Equity in the Workplace (view here).

As an industry leader focused on the delivery of health, wealth and investment solutions to and through the workplace, Voya Financial is committed to delivering on its mission to make a secure financial future possible for all — one person, one family, one institution at a time.

 

 

 

All data unless noted otherwise is based on the results of Voya’s DEI research conducted June 2022. Research represents more than 163,000 employees across various industries.
[1] EBRI, “Retirement Confidence Survey” (June 2021).
[2] Federal Reserve Bank of New York; Total Household Debt Surpasses $16 trillion in Q2 2022; Mortgage, Auto Loan, and Credit Card Balances Increase, August 2022.