As much as people try to keep their personal and work lives separate, “it’s hard,” says Marianne Assaf, senior principal and pension and savings practice leader at Normandin Beaudry.
As much as people try to keep their personal and work lives separate, “it’s hard,” says Marianne Assaf, senior principal and pension and savings practice leader at Normandin Beaudry.
Employers are realizing that employees experience mental health struggles because of financial distress and they bring it to the workplace. So they are providing access to resources for their employees such as budgeting tools, webinars on financial wellness, and access to financial advisors.
The source of financial stress does vary between the demographics in the workplace. “The younger generation is worried about paying off student loans or being able to buy a new home. They are also worried about how they will be able to save for future projects. Those with children and mortgages are worried about the rise in interest rates and inflation and how to adjust their spending habits. The older generations are really focused on saving for retirement and planning for retirement,” she says. This is prompting some to suggest that instead of helping employees save for retirement, employers should instead sponsor savings plans to meet the financial goals of employees in the various stages of their lives.
While employers are concerned about this short-term vision, the “retirement plan is part of the total rewards offering. However, it must be appreciated by employees and considered attractive,” she said.
Therefore, employers are adding flexibility to saving by broadening the focus and supporting their employees in achieving their life goals such as purchasing a home, the birth of a child, children’s education, and eventually retirement. In addition to the traditional retirement savings plans, they are offering deferred profit sharing plans, home ownership savings plans, and tax free savings accounts to allow for cash outflow flexibility during the individual's career.
With this approach, employers believe employees who are motivated to achieve concrete shorter term goals that matter to them will get into the “habit of saving. This habit will enable them to prepare for longer term such as retirement,” she said. Ensuring this habit is created is done by automatically enrolling all eligible employees into these savings plan. These can be designed so only a portion of saving can be used for shorter term or midterm goals, with the employer matching the portion of savings for retirement.
However, “it's really important to educate employees and communicate with them regularly to ensure that at some point retirement becomes an important goal,” said Assaf.
And programs to reduce financial stress provide employers with an additional benefit ‒ attraction and retention.
“Some younger generations employees don't think about their careers the same way as older generations did. They're not entering the workforce thinking that they'll be with the same employer for 20 or 30 years. Having their employer contribute to their shorter term goals, to their dreams, makes an employer attractive,” she said.
“We often think about flexibility today in terms of hybrid work, but more and more we need to have it in benefits and we're seeing employees requiring it in their savings plan.”
