A survey has revealed that due to financial strain, employees are increasingly requesting emergency savings accounts as a workplace perk.

• According to a new workplace survey, employees report that building savings for an emergency and paying monthly bills are just as stressful as, if not more stressful than, saving enough for retirement.
• The Secure 2.0 legislation passed last year allows employers more flexibility in designing their benefit plans.
• Some companies are now offering more holistic financial wellness benefits, including emergency savings and student loan repayment plans.

The financial concerns of high inflation and a possible recession have influenced the type of workplace perks that employees value most.

Some employers are taking notice and expanding their offerings.

Inflation for September 2023 is shown in a single chart. The Social Security cost-of-living adjustment for 2024 is 3.2%. Lawmakers are targeting credit card debt, interest rates, and fees.

According to the 2023 Workplace Wellness Survey by the Employee Benefit Research Institute, employees report that building savings for an emergency and paying monthly bills are just as stressful as, if not more stressful than, saving enough for retirement.

For the first time in four years, the EBRI survey found that retirement savings were not the main source of financial stress for employees.

Traditional retirement plans aren’t enough

For years, employers have primarily focused on providing comprehensive workplace retirement plans as their main financial benefit.

Workers in the EBRI survey said they would allocate $192 for retirement, $171 for emergency savings, and $89 for a health savings account when given an extra $600 from their employer. They would also prioritize paid time off, college savings, and paying down college debt.

Workplace emergency savings plans are popular

While research from the Bipartisan Policy Center found that about 42% of employees want to be automatically enrolled in an emergency savings account through their employer, only 10% of employers offered these benefits in 2022, according to human resources consulting firm Buck.

As employers recognize the benefits for both the worker and the workplace, the number of remote workers may continue to rise.

Chantel Sheaks, vice president of retirement policy at the U.S. Chamber of Commerce, stated that when you need money for an emergency, you won't be taking a withdrawal from your 401(k) plan, missing a student loan payment, getting evicted, or having your water shut off, which will allow you to come to work without worrying about these issues.

New law gives employers more benefits flexibility

Last year's passage of Secure 2.0 legislation granted employers greater flexibility in offering emergency savings accounts.

Starting next year, employees can have up to 3% of their paycheck automatically deposited into an emergency savings account, with a maximum of $2,500. They can withdraw the money up to four times a year without any fees.

The law, effective in 2024, includes provisions for matching 401(k) contributions based on employees' student loan payments.

Amy Friedrich, president of benefits and protection with Principal Financial Group, stated that employers now spend an equal amount of time discussing non-wage related matters that affect employee productivity, as they used to solely focus on wages. Principal Financial Group works with over 145,000 small and midsized businesses in retirement and employee benefits.

Employers are increasingly providing financial planning resources to workers, including credit card and debt counseling, financial coaching, and budgeting assistance.

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