Financial wellness has long been a topic of conversation at financial institutions and fintechs alike. While the definition varies depending on who you talk to, 2020 has pushed financial wellness front and center. We know there is a direct correlation between financial health and mental and physical health, and as such, all parts of the ecosystem need to start prioritizing the financial side of it. While unemployment rates increased in response to the pandemic, employers who want to retain their talent and attract the best talent moving forward should think about how to care for their employees’ holistic financial health. Luckily, employers aren’t alone, there are a myriad of fintech startups and the like focused on the space.
The continuing Covid-19 pandemic has left many workers in vulnerable financial positions, and financial worries carry over into the workplace, particularly when the workplace is the home. A March 2020 report from Bank of America BAC +3.7%, capturing pre-pandemic sentiments, noted that 62% of employers feel “extremely” responsible for their employees’ financial wellness. Financial wellness for an employee means much more than salary. It includes things like health insurance, retirement, tuition reimbursement, student loan forgiveness, child care, parental leave, flexible work, etc.
The government is playing an active role as well by offering assistance to employers. “The most recent coronavirus relief bill has extended the ability for employers to make payroll tax-free student loan contributions of up to $5,250 per employee through December 31, 2025,” said Romy Parzick, CEO of Vault, whose mission is reimagining the benefits space for today’s economy. “This five-year extension via the stimulus bill is an indication to many experts that this provision will become permanent.”
Parzick noted that student loan assistance not only helps retain talent but can also be a helpful hiring tool. While 56% of employers offer help with tuition payments, just 8% offer help on employees’ student loans. It’s even common for working parents with student loans of their own to take out new loans for their children’s education. Employees that can step in and offer assistance here will make a huge contribution to their employees’ financial well-being, and this can be a great advertisement to attract and retain new talent. Employers should look closely at the new coronavirus bill to see how they may be able to take advantage of it. “With this new tax treatment, it’s a win-win proposition,” Parzick said.
Student loans is just one example of how employers should be thinking about employee financial health. There is a myriad of startups looking at the space including Payactiv, a startup that allows employees access to a portion of their earned wages, to Espresa that focuses on “culture benefits” covering many things including physical fitness, to Lumity that allows employers to provide end to end benefit solutions starting with health insurance. Technology has provided employers of all sizes the ability to show they care about their employees’ financial health and doing so is a win-win for businesses in the post-Covid economy leading to happier team members and greater attraction and retention of talent.
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