Is debt management the new benefits frontier?

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Helping employees manage their unsecured debt (credit cards, medical loans, and personal loans) could help employers attract and retain top talent in today’s high-turnover environment. Indeed, offering a benefits package that does not include debt-related financial benefits may not be enough to promote worker well-being, productivity, and satisfaction.

Survey data shows benefit gap

A recent Financial Health Network survey found a high need for debt-related benefits, as well as gaps between those who need them most and those who currently have access to them. The survey asked workers with unsecured debt about their financial struggles over the past 12 months and found that while all survey respondents worked full-time, many struggled with their finances and used their working time to manage their debt.

Almost half (47%) of respondents said they had not been able to pay all their bills on time in the past 12 months. 50% of respondents who said that debt is a source of stress for them said that they had spent an average of at least one hour per week at work dealing with debt-related issues (for example, contacting creditors) in the previous month.

While employees’ unsecured debt has a significant impact on their well-being and productivity, survey responses revealed that workplace benefits are currently lacking when it comes to providing employees the help they need to manage and avoid debt.

The survey asked respondents about 13 different debt-related benefits, including financial coaching, emergency grant funds, debt consolidation loans, student loan repayment assistance and more, and found that:

  • For each of the 13 debt-related benefits, less than 40% of respondents said their employer offers the benefit.
  • One in five respondents said they had no access to any of the 13 debt-related benefits.
  • Employees with higher total debt, lower-income employees, and women were more likely to say they did not have access to debt-related benefits, despite having higher levels of debt-related stress.

Designing Debt-Related Benefits to Meet Workers’ Needs and Preferences

The good news for employers looking to close the benefits gap revealed in the survey is twofold. First, employees expressed clear and actionable preferences about which benefits features would be most useful to them. Second, survey responses indicate that providing useful debt-related benefits will pay dividends for employers in terms of employee well-being and satisfaction.

When it comes to designing debt benefits, employees place high value on guarantees of confidentiality. Employees, especially those with higher unsecured debt and those with low incomes, said they worried about what their employer would think if they knew the amount of the employee’s debt, for example. When designing financial wellness benefits related to debt, employers and HR teams should emphasize privacy practices and ensure that employees’ debt is not disclosed to their managers or employers.

In addition to confidentiality assurances, employees appreciate the ease of access, a clear explanation of benefits, and the availability of personalized assistance when considering participating in debt-related financial wellness benefits.

Getting the right mix of debt-related benefits, with the right features and messaging, is likely to have a positive impact on employee well-being and satisfaction.

  • 63% of respondents said access to debt-related financial wellness benefits would reduce their stress.
  • 68% said it was important for an employer to provide debt-related financial wellness benefits.
  • 62% said they would be more likely to stay in a job that offered debt-related financial wellness programs that were helpful to them.

The take-out sale

Employers have the opportunity to bridge the gap between employees’ needs for debt support and the benefits available to them. By leveraging these recent survey results (or suggesting employers conduct their own employee surveys), HR teams and benefits professionals can begin to identify gaps in current employee benefits offerings. businesses. Armed with this information, they can suggest additional products and services designed to help workers manage their unsecured debt and avoid taking on more debt. It’s time for financial wellness benefits in the workplace to go beyond standard retirement savings and health insurance offerings, and debt-related benefits are a great place to start.

Amelie Josephson East Senior Manager, Innovation, at Financial Health Network

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