A year of pandemic uncertainty has made financial wellness a top concern amongst employees, and employer-sponsored benefits a recruitment and retention tool.
In the US, for example, employees who felt they had company benefits that improved their wellbeing also felt more productive and engaged and less stressed and tired during the pandemic, a Metlife survey of more than 2,000 respondents found.
But many businesses are missing out on fully using these employer-sponsored programmes as incentives to recruit and retain talent. Programmes include comprehensive health insurance and pension and retirement benefits, such as 401(k) plans in the US and superannuation contributions in Australia.
“It's going to be really important for employers to make sure they’ve got the right superannuation fund in place that suits their employee demographics,” said Andrea Piaia, a Melbourne-based director of retirement at global advisory firm Willis Towers Watson. “It's been a set-and-forget at many organisations, which have had their super funds in place for many years and haven’t done any real review.”
Even before the pandemic, a majority underappreciated the effect benefits had on employee performance, engagement, and loyalty, a 2019 Accenture survey suggests.
More than half of respondents in the Accenture survey said pension and retirement benefits were a determining factor in whether they accepted a job (68%) or stayed in a job (62%). The survey polled about 5,000 employees across ten countries.
The survey also found that 84% of respondents want help with pension and retirement planning, and 82% want help with coaching. But fewer than half of them receive personal finance education and coaching (41%), and 43% said their employers offer no planning assistance.
In the Metlife survey, 59% of respondents said that their employers provided benefits and programmes to support and improve employee wel-being, which generally included life, dental, and disability benefits. Employers that went above and beyond expectations also offered voluntary benefits such as critical illness, hospital indemnity, and financial wellness programmes.
Metlife respondents who felt mentally, physically, financially, and socially healthy during the pandemic were more likely to be loyal, engaged, and productive, compared to those who ranked their wellbeing less healthy.
“There has been a shift in behaviour in the way people look at companies — especially employees. We’re looking at companies to be a positive contributor to the community, and that goes beyond paying a salary package,” said Arlyne Chinyanganya, CGMA, ACMA, a London-based finance manager at UK telecommunications company giffgaff.
Tailored employee advice
Chinyanganya has launched a financial wellness programme called Root to Froots to support local community members who are under financial stress. At giffgaff, she is leading a programme providing one-to-one advice for any employees who want financial guidance.
She believes financial wellness should be central to efforts to retain, recruit, and engage staff. “Financial wellness needs to be one of the objectives for the company so everyone is working towards improving the culture for the company,” she said. “That’s how I addressed it, and it was very easy to get buy-in, simply because we’ve lived through a crazy time in the past year.”
Reevaluating retirement programmes
Increasingly in developed economies, the burden of retirement planning is falling on individuals’ shoulders. This can cause stress, particularly when busy employees do not have the time, information, or training to make long-term financial plans.
In Australia, employers are required to make government-mandated superannuation contributions to a fund for their employees. Employees can make additional contributions, choose to sacrifice some of their pre-tax salary to their funds, and make deposits into their spouse’s funds.
Regulators are closely monitoring the performance and fee-to-returns ratio of these various “super” funds. Also, the pandemic has reignited debate about the core purpose of superannuation, after the government introduced a temporary measure to allow people to withdraw $10,000 as a financial ballast during the pandemic.
The recent crisis has made it more important for companies to review the suitability of their employee default fund, Piaia said
As the employee population and demographic has changed over time, the suitability of those arrangements hasn’t been thought about, she said. Employers should be looking at it through the lens of insurance fees, costs, and investment offerings. This will become even more important as the proposed Australian government legislation to “staple” employees to their current fund throughout their working life becomes a requirement.
Collaborating and communicating
Taulia, a US-based supply chain management and financing software company, provides its employees with services from professionals that can provide expertise on savings and investing, as well as multiple types of compensation and vehicles for saving and spending. For retirement benefits, Taulia offers all employees retirement benefits in line with local practices. For example, in Europe, Taulia contributes to pension plans. In the US, Taulia has a 401(k) match, which is an employer’s contribution to an employer-sponsored retirement plan that allows employees to invest a portion of their pre-tax earnings.
Financial wellness programmes that fail to draw broad participation may be tailored to a limited demographic, the benefits may not be well communicated, or employees don’t see the benefit, said Rene Ho, the CFO of Taulia. “We seek to offer programmes that have broad participation. We seek feedback from employees and try to improve programmes as required. Communicating programmes in a holistic strategy is also important.”
Collaboration between HR and finance can make a difference, said Ho, who is based in San Francisco. “Human resources excel at understanding what resonates with people, and their different needs and finance can assess affordability and competitiveness.”
— Luke O’Neill is an Australia-based freelance writer and the owner of Genuine Communications. To comment on this article or to suggest an idea for another article, contact Sabine Vollmer, an FM magazine senior editor, at Sabine.Vollmer@aicpa-cima.com.