When Unum Group discovered that the majority of its non-highly compensated employees worried about not having emergency savings, the company got to work: It made emergency savings accounts linked to its $2.5 billion 401(k) plan available to employees.
Since the emergency savings program went live in 2022, more than 800 employees have enrolled in the program, each amassing an average of $1,500 in emergency savings.
“We knew that our employees were struggling,” said Ben Roberge, assistant vice president of financial wellbeing and retirement programs at Unum and the leader of a team that won an Excellence & Innovation Award. “We had a strong retirement savings program in place and a competitive employer match, but we knew we needed something that was a little bit more immediate that would help our employees.”
Roberge explained that a workplace well-being survey showed that financial stress dominated three of employees’ top five concerns.
While employees initially enrolled in the program on a voluntary basis, all newly hired employees are now automatically enrolled in the program if they earn less than $150,000 a year, a practice that started in April 2023. All new hires are enrolled at a 1% post-tax savings rate, which employees can increase to as much as 50%, provided the amount doesn’t exceed $10,000 annually. Employees can opt out of the program at any time.
Employees can select any investment within the company’s 401(k) plan for emergency savings, but if they do not make a selection and they are automatically enrolled, their emergency savings is invested in the target-date fund used as the 401(k) plan default investment option, Roberge said.
Roberge added that while Unum does not provide a match on contributions made to the emergency savings accounts, it might consider doing so in the future.
Unum’s program is bolder than the in-plan emergency savings accounts under SECURE 2.0, which cap emergency savings at $2,500. The program was developed prior to the legislation coming out.
“Our program offers a little bit more flexibility,” Roberge said.
Roberge is heartened by the program’s strong participation metrics.
“Over 40% of our employees are continuing to stay in and participate in the accounts,” he said, adding that they’ve collectively saved more than $1.2 million in emergency savings.
Roberge noted that even though employees are drawing money from their emergency savings accounts, 85% continue to contribute.
“They continue on a regular basis to contribute to the account, and almost 92% of them have an account balance,” he said.
Another positive is that the program has not caused employees to decrease their contributions to their 401(k) retirement savings accounts, with the average deferral rates holding steady at more than 7.7%.
Lastly, the program has had an unexpected positive impact on employee turnover.
“We are seeing that employees who are contributing to this account are turning over on a less frequent basis by about almost 40% than employees who aren’t contributing,” Roberge said.
