.jpg)
Employers are increasingly adding emergency savings accounts to employee benefits plans to help them be prepared for a rainy day.
The pandemic showed us just how badly this was needed for essential workers.
Many companies also want to increase employee retention by helping them better prepare for unforeseen expenses.
This move by the employers began before the epidemic and has gained traction in recent months. Some companies are incentivizing employees to build personal emergency accounts by offering cash and other incentives.
SaverLife is a charity that rewards users who participate in activities like 'savings challenges,' with opportunities to win prizes of up to $10,000.
SaverLife’s CEO states that “Employers understand that if you can't handle your day-to-day needs, you won't save for long-term goals like retirement.”
Why Are Companies Offering Contributions to Savings?
Why are companies chipping in to help their employees save some money for emergencies?
It's not due to any legal requirement.
According to the Willis Towers Watson Survey, 26% of employers have an emergency account in their employee retirement plan, and 19% are planning to .
The US is currently going through a 'mass quitting' phenomenon, where employees frustrated with their pay and benefits have increasingly decided to abandon their jobs. This has almost become a de-facto labor movement.
Many people struggled to make ends meet during the pandemic. A 2018 Federal Reserve report found that 40% of American housholds would not be able to cover an unexpected expense of $400.
And this was before Covid. The pandemic has made the situation worse for some families. In this study, 11,000 people admitted that they are worse off in 2020 than the previous year.
Of those who did have retirement savings pre-covid, many had to spend them.
Data shows that people are not ready for an emergency, let alone an extended pandemic. Today it is the virus; tomorrow it could be another economic collapse like the subprime crisis.
So, who is there to help? Aside from the stimulus checks and unemployment payments, which are starting to run out, it's hard to find an answer.
That's why, in a surprisingly high number of cases, companies are stepping up to offer plans to match their employees' personal savings.
Here’s a small example of how Emergency Savings Funds can help;
Becky Dillon (31) said her family was able to weather the economic slump, thanks to the emergency savings account she started funding in 2019. Ms. Dillon started saving through a program sponsored by her employer, Alorica Inc.
Ms. Dillon, who works for a contact center in Bluefield, West Virginia, admitted that she was hesitant to join up at first. "I said to myself, "I don't need that. I can save money on my own, I thought, until I realized I wasn't.
When Ms. Dillon joined her bank account on the SaverLife platform, she received a $20 contribution through her employer-sponsored program. She also received $240 in matching money for saving $600 over the next six months.
Then, her husband who is a mechanic, had his hours shortened. Her family was able to make ends meet in part due to what her company contributed to her savings.
Companies also find that financially stressed employees are not as productive. As they are worried about their financial wellbeing, it takes a toll on their performance, which further fuels anxiety about getting fired due to poor performance.
Companies With Best Emergency Savings Funds
A handful of companies have set up highly beneficial employee savings funding systems, aimed at bringing a stronger sense of security to the workforce.
These companies offer direct funding to employees for their savings, based on what they deposit for themselves voluntarily.
The listed companies here are also leveraging gamification to further streamline the savings process and make it more fun and engaging.
Increased interest in saving today for a better tomorrow is becoming increasingly necessary to prepare for the unknown.
Employees working at thecompanies listed in this article are potentially better off than those who do not have a savings plan.
Whereas KFC has combined a monetary program with another third-party contributions plan, SunTrust has set up a program to help its employees save $1000 in six months.
Companies Offering Up To $1000 in Emergency Savings
Levi Strauss
Levi Strauss has joined hands with the Red Tab Foundation to support their employees during uncertain times. Their employees have the option of saving $500 in six months, with $240 coming from the employee and $260 from the Red Tab Foundation.
Job openings a.
SunTrust (now Truist)
SunTrust Banks rolled out an emergency savings program called Momentum onUp. In some instances, the program gives $1000 towards employee emergency funds.
As it’s a financial institution, SunTrust has offered to help other organizations roll out the same program for their employees. A couple of them include Home Depot and Delta Airlines.
In order to quality, employees must complete a personal finance education course. They also need to set up voluntary automatic contributions towards an emergency fund.
Work opportunities are available at SunTrust as well.
Even
Even.com has launched an employer-sponsored emergency savings program, and it has $200 million in the fund.
The company is ready to provide its employees 10% APY on their first $500 saved for helping during emergencies and hardships.
Here are the job opportunities at Even.com.
Ascent
Ascent has partenered with Sunny Day Fund Solutions Inc. and SaverLife to provide an emergency savings account. The company-funded interest rate of 17% to 36% will be given to employee deposits, limited to earnings of $300 per year.
The longer an employee works with Ascent, the higher the interest rate will be. As the plan is yet to be rolled out, the company is expecting 80 to 90% of its employees to contribute to the Sunny Day Fund.
Want to work at Ascent? Look here.
KFC
Kentucky Food Chicken’s aim is to help its employees raise at least $500 in short-term savings. The global food chain is leveraging the services of a Fintech provider and gamification to help its employees achieve this goal.
KFC is also contributing to the fund with matching contributions via a program created with the help of SaverLife.
KFC corporate and restaurant careers are listed here.
Companies with In-House or Third-Party Savings Programs
Home Depot
Home Depot and its companies have set up several plans and programs to help their employees sustain themselves during difficult times.
Even though the company might be taking help from the SunTrust system, the Homer Fund is the major source of emergency fundings.
Specifically, the Direct Grant segment deals with uncertainties, illness, injury, and hardships caused due to natural reasons.
Every contribution by an employee towards another is matched by the Homer Fund with the same amount.
Check out the Home Depot Careers page for any openings.
BlackRock
BlackRock started an initiative called Emergency Savings Initiative (ESI). The purpose is to help companies identify, shape, and test systems that provide financial stability for vulnerable employees.
Find your dream job at BlackRock here.
T. Rowe Price Group
Later this year, T. Rowe Price aims to offer an emergency savings program to the 5,900 firms who utilize it as a 401(k) record-keeper.
Those who choose to enroll will link their bank accounts to an app that will transfer the amount it believes they can afford to save to an FDIC-insured savings account based on prior spending habits.
Find out relevant jobs at T. Rowe Price Group here.
Social Finance Inc.
Initiating a workplace benefits program applying to its 900 employees, Social Finance Inc. established an emergency savings program. The company will pay the account fees and contribute an average of $50 per month to the accounts through monetary or incentive schemes.
Find company-listed jobs on the SoFi Careers page.
Alorica Inc.
Alorica Inc. works through its Making Lives Better with Alorica (MLBA) program. It's a comprehensive tool to help employees during emergencies and also help employees help others during stressful times.
Every contribution helps the company make an impact in the lives of the people in the community.
Want to work at Alorica Inc.? Check out their careers page.
Kroger Co.
The Kroger Helping Hands Fund Benefits Trust's objective is to uplift their associates (employees) via donations. The Helping Hands Fund helps associates facing financial difficulties as a result of an unexpected or emergency scenario.
Kroger Co. does not demand any contribution from its employees. Instead, the company strives to help its employees through stressful situations, primarily covering health issues due to Coronavirus.
Follow this link to find out about jobs at Kroger Co.
Voya
Voya runs financial wellness programs for employees and its clients.
Voya's focus on emergency savings aligns with the company's broader mission to address Americans' holistic financial wellness needs.
This comes at a time when many are looking for ways to supplement their retirement savings and absorb short-term financial emergencies.
This new service will complement current efforts by Voya and its clients to help employees save for emergencies. Benefits also include education, coaching, and after-tax contributions as an "in-plan" solution within Voya-managed retirement plans.
Find jobs at Voya here.
UPS
United Parcel Services has an employee benefits program for its US workforce. The emergency savings program is meant for its 90,000 non-union employees in the United States.
It allows them to set aside liquid after-tax funds quickly and automatically through their 401(k) retirement plan, administered by Voya Financial.
Find the UPS jobs at this link.
Benefits of Employer-Sponsored Emergency Savings
Emergency Savings Accounts (ESA) might have picked up the pace after Covid-19 showed our unpreparedness for times like these. However, this system is not new.
A number of employers had already set up special structures to support their employees. Generally, these are called retirement plans, but an extended version of the same can also include emergency withdrawal.
Quick Access to Funds
Giving employees easy access to a savings account or another conveniently accessible account is, in many cases, critical to their financial health.
Employees may be less likely to dip into their retirement funds in times of need if they have a savings account.
Even if they choose to pull money out of their retirement account early to pay expenditures, it may take several weeks to get the funds, subject to taxes and penalties, reducing the amount you receive.
Saving becomes a Convenient Habit
Employees' productivity can suffer as a result of their financial worries. Allowing them to contribute a portion of their earnings to an emergency savings account makes saving more manageable.
Employees are also less likely to take out loans or early withdrawals from their current retirement funds when they have an emergency savings account.
Zero Cost Savings
Where opening a savings account is subject to some restrictions, especially when it comes to maintaining a minimum balance, employer-sponsored funds do not have such restrictions.
Employees can save regularly with the assurance that their savings will be complemented with a similar amount from the employer.
Understanding the Employer-Sponsored Emergency Savings Fund
Employer-sponsored emergency savings plans are not all the same, but they all serve the same underlying purpose. That is, to provide employees with access to liquid money should they require cash quickly.
A workplace may provide one of a few standard employer-sponsored emergency savings plans.
The employees may have an in-plan option, in which the company provides a supplement to your retirement plan that is meant to prevent them from depleting their retirement assets too soon.
Another alternative is to enroll in a separate savings program offered by a bank or credit union. Here are three primary structures for emergency savings funds.
Employee 401(k) plans after taxes: Employers and employees can contribute after-tax money to an emergency fund managed by the same firm that manages the company's 401(k).
While the employee’s earnings are subject to taxation and penalties upon withdrawal, after-tax contributions are not, making them more accessible than pre-tax 401(k) contributions.
Deemed Roth IRAs within a 401(k) plan: This works similarly to a 401(k), but earnings are tax-free because both plans are funded with after-tax contributions, while earnings may still be subject to taxes and penalties.
Depository institution accounts: Some businesses do not provide retirement plans. Instead, they may encourage emergency savings through depository accounts, which are easily accessible, and are FDIC-insured savings accounts at banks or credit unions.
Conclusion
Companies help their employees with matching contributions or by creating grants accessible by employees subject to predetermined conditions.
Stressful times like the pandemic we are witnessing have made us realize the importance of savings.
The problem with increasing savings is that we don’t have enough structures put in place to incentivize regular and constant savings contributions. Make no mistake; there are plenty of options for retirement savings, but not for regular savings.
Company matching employee savings programs bring more people into the circle and help them prioritize saving for emergencies.
