Insights from industry leaders: How workplace ESAs are revolutionizing employee benefits

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Devin Miller
June 6, 2024

Any company is only as good as the sum of its parts, or the people it has on staff. Organizations that want to attract and keep the most talented employees have learned that it’s not just enough to offer a competitive salary, health insurance coverage, and a retirement savings plan. A full benefits package is becoming increasingly important to full-time workers, including job-seekers.

As one managing director of talent succinctly phrased it on LinkedIn: “These days, a lot of the ‘benefits’ I see listed on job adverts aren’t really benefits. They’re fluff.” Offering company swag, in-office lunches or snacks, and game equipment in the workplace are not benefits that make workers feel valued and prioritized. Benefits that improve their work-life balance, provide mental health support, and help them financially are much more attractive than trendy (but mostly useless) perks like a branded backpack or hoodie.

What are the top minds in workplace benefits saying about workplace emergency savings accounts (ESAs)? Here’s a short overview of the LinkedIn chatter about the benefits that workers value the most — and that also value workers the most.

The role of workplace ESAs in every benefits package.

Employees have been feeling financially pinched for years, according to annual research by PricewaterhouseCooper, and the most recent employee stress survey shows that those worries are increasing, not subsiding. More than half of full-time employees (60%) say that finances are a source of concern for them, and 74% would like some kind of help with their personal finances.

Saving for long-term goals, such as retirement, is one way that employers have traditionally supported their employees financially. The strong link between financial health and mental health shows that although long-term savings are important, a 401(k) by itself is often not enough to give workers the financial peace-of-mind they crave.

The holistic approach to employee financial health

More and more experts in both finance and employee benefits are recognizing the need to integrate workplace ESAs with other programs to offer a more holistic and intuitive approach to employee financial wellness.

One clear and well-documented example is an increase in hardship withdrawals from retirement savings accounts. In February, AARP reported that early hardship withdrawals from retirement savings more than tripled between 2018 and 2023, according to one retirement plan provider. While early hardship withdrawals can have serious long-term consequences for retirement savings, many employees don’t have an alternative way to pay for emergencies. Providing accessible workplace ESAs is one way that organizations can help their employees cut down or eliminate these withdrawals.

BlackRock Foundation’s Emergency Savings Initiative collaborated with Commonwealth to explore integrating emergency savings and education-related savings, as another example.

Providing workplace ESAs and other forms of workplace savings accounts — and making those accounts easy to manage and simple to access for every employee — is only going to become more prevalent among the top places to work.

Using behavioral insights and personalization to boost savings

There is a wealth of employee behavioral data that organizations can tap into in order to make decisions about how to encourage employees to participate in workplace ESAs and to save more money in their emergency accounts. Those insights can include:

  • Online interactions, such as open rates for emails containing educational financial information, or virtual meetings centered around increasing benefits participation.
  • Performance metrics, such as goals achieved, work completed, or total money saved.
  • Engagement metrics, such as attendance at in-person or virtual workplace workshops, training programs, or events.
  • Social interactions, such as communication with coworkers or participation in social networks, including company-wide savings leaderboards.

Aggregating this data and understanding how individual employees are interacting with different benefits offerings can give employers the opportunity to personalize future communications and incentives for their workers. 

One great example is offering sign-up bonuses for a workplace ESA right after an online interaction or an in-person event, or using participation in savings leaderboards to encourage employees to save more in their emergency funds.

How technology is shaping the world of emergency savings

It’s no secret that the advent of smartphones and the continued advancement of various technology services, including fintech (financial technology), is changing how employees interact with their friends, their employers, and their own financial health and goals. It’s almost impossible to imagine a bank surviving in 2024 without offering some kind of mobile app that allows users to track account balances and manage transfers — and that’s just scratching the surface.

If it’s going to work and be widely adopted, technology should solve a common problem and make life easier for its users. For those who have struggled with saving for an emergency, allowing them to automatically deposit money directly from their paychecks into an emergency savings account can make a huge difference. Offering a mobile app where they can track their overall savings, withdraw funds when needed, and even engage with educational modules on-demand can increase engagement and satisfaction with an emergency savings program.

From the employer’s perspective, offering innovative fintech that’s easy and intuitive to use can help them better understand how employees are engaging with a workplace ESA, including how much they’re saving, how often they’re making withdrawals, and whether they’re using those additional financial education modules.

The power of bonuses, matching, and other incentives

Many employers and workers are familiar with the concept of a 401(k) match, whereby organizations will contribute regularly toward an employee’s long-term savings account. For example, many employers will match up to a certain percentage of each employee’s salary, and the standard financial advice is that employees should contribute the maximum matched amount in order to reap the biggest benefits of this incentive.

A matching bonus with a workplace ESA is similar, but it’s not typically a dollar-for-dollar match. If an employee saves $25 per paycheck in their workplace ESA, then an employer might offer to contribute $5 to the account, for a total of $30 per pay period. These matching amounts can be set by the employer to encourage a minimum emergency savings contribution that could make a big difference over time.

We’ve seen many more popular incentives offered at SecureSave, including bonuses for signing up for the workplace ESA, additional contributions that employees can earn by completing financial education courses or by meeting with a workplace-provided financial advisor, or milestone rewards that kick in when an employee meets certain savings targets. 

Regulation, legislation, and other compliance trends

As workplace ESAs become more popular and prevalent, we expect to see change in both how employers present these offerings to their staff and how different programs and platforms become more deeply integrated into the highly regulated world of financial services and benefits.

A prime example is the SECURE 2.0 Act of 2022, which will require many employers with 401(k) and 403(b) retirement savings plans to begin automatically enrolling employees in those plans beginning after December 31, 2024. This is a change that has been pending for two years, and other milestones we’ve encountered include more interest from employers in workplace ESAs and other solutions to help them provide more financial support for their staff members.

The legislation provides a framework for not just fintech companies but also banks and other financial service providers. I anticipate that the advent of the clear expectations outlined in SECURE 2.0 will create a wider breadth of emergency savings products, and we’ll start to see more standardization in the future.

One way to think about the future trends of workplace ESAs is to compare them to similar (but not identical) programs such as health savings accounts and 401(k)s. These common benefits offerings became more popular and widespread after legislation to support and regulate them was enacted, and I expect the same will be true for workplace ESAs.

Following the leaders: How emerging trends can help you stand out as an employer

Above all else, employees are human beings, ones with fears and hopes that they can’t leave at home or mentally shelve when they clock in at work. Understanding what motivates them, what they worry about, and what they expect from you as an organization is how you form ongoing relationships and help them feel supported and seen.

There are ongoing discussions on LinkedIn and other platforms that encompass not just workplace ESAs but also behavioral insights, legislation and regulatory changes, how the digital experience is shifting expectations for everyone, and much more. If you’re not already following me, let’s connect! Keeping in touch with the people who lead those discussions can help you become a better employer and build a more attractive workplace for your current and future staff.

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Devin Miller

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