When it comes to financial wellness tools, industry sources say the key to successful takeup is ensuring that the options meet the needs of a sponsor's unique employee groups.
Takeup is higher when employers offer a strategy that employees have requested, said Richard Sweetman, senior director and financial well-being lead at Willis Towers Watson PLC in London.
Allowing employees to divert additional contributions to a retirement plan beyond the mandatory employee and employer contribution of 8% to an individual savings account, tends to be more successful than just giving participants the option of paying cash into a separate ISA program, he added.
According to research conducted independently for workplace savings benefit and ISA provider Cushon Money Ltd. in May, 71.5% of 2,000 U.K. employees said an employer should set up a solution allowing for contributions to flow into workplace savings accounts such as ISAs alongside a retirement plan.
Some 41% of these employees wanted some of their retirement contributions to be redirected into such a workplace savings account instead of their retirement plan.
Aileen Newall, head of reward at HEINEKEN U.K. in Edinburgh, said that the firm's flexible benefits program, known as The Benefits Bar, is made up of a range of options including a retirement plan with an additional contribution match option of up to 10% of salary, a savings account and educational options.
"A core principle of The Benefits Bar is to give flexibility and choice for all colleagues, no matter their lifestyle, she said. Some colleagues might want the discipline of saving every month, while others might have a short-term savings goal in mind, she said.
Through a platform provided by Cushon, HEINEKEN's workers can view their retirement projections to help make financial decisions, she added. Cushon also allows workers to add regular savings into an ISA.
But groups of low-income employees might need an extra nudge to get them to utilize financial wellness programs on a voluntary basis — even if they are interested in savings programs offered by plan sponsors.
To help develop wellness programs that would be more suitable for low-income employees, NEST Insight, the research unit of the £15 billion ($20.5 billion) defined contribution multiemployer plan National Employment Savings Trust, is currently running a sidecar account trial with a few U.K. employers. In the Jars sidecar savings project, which was first announced in 2018, employees of participating employers, such as BT Group PLC, can set their own savings target for an emergency fund, which they contribute to as much as they choose. Once the target savings amount of the sidecar account is reached, these contributions switch destinations and flow instead into a participants retirement account.
Will Sandbrook, executive director of NEST Insight, said that the "organic" uptake by participating employees has so far been low. "There is a quite substantial gap between people who respond they would use the benefit (vs.) then actually doing it," he said. "It's a little bit early to comment about the flows into the emergency savings in the project," he said. However, "in terms of setting it up, people have found it straightforward."
One option NEST Insight plans to test to encourage usage involves automatically signing employees up to use the sidecar savings tool but then giving them the option to opt out. Once employees have been signed up they are less likely to opt out, he said. Information on how much has been saved in the pilot program to date was not disclosed.
