Look to 401(k), Pension Funds to Provide Employees with Financial Wellness Programs


Remember January 1, 2011? What were your resolutions? Quit smoking.  Eat better.  Exercise more.  Spend more time with family.  Spend less, save more.
These are probably just a few of the things your employees vowed to do at the start of the year.  Now, a little more than 90 days later, how many of these resolutions have been kept?  How long did it take you to break yours and how long do you think it took for your employees to break theirs? Let’s face it…it is a time-honored tradition to almost instantly break New Year’s resolutions; if it wasn’t, we’d be a nation of happy, healthy overachievers!
One of the biggest challenges to KEEPING a New Year’s resolution — or making any type of behavior change, for that matter — is developing a support system to keep on the right track.  We seem to be getting better at creating support systems for many common goals.  Weight Watchers has weekly weigh-ins and a point counting system. Personal trainers are often the best way to keep your exercise resolutions because you have someone to “answer to” on a regular basis.
But, what about personal finance?  Did you know that financial stress is one of the biggest causes of lost work place productivity? Maybe you have seen it in your own organization. Yet very few companies provide their employees with resources to keep their finances on track. 
A key to eradicating this issue in the workplace is to provide employees with a support system for personal financial wellness.  Most employers balk at the idea, believing it is probably an added cost.  What they don’t realize, however, is that many companies can pay for these services with existing administrative funds from 401 (k) plans and pension funds. 
Many 401(k) plans have a portion of their administrative costs set aside for employee education.  This type of funding can often cover budgeting training from a personal financial coach. 
There are three significant advantages to using 401 (k) administrative funds to train employees in personal budgeting.  First, when people learn to budget better, it creates better cash flow for them.  With some education, this can result in higher 401 (k) plan participation, which is good for all plan participants.  Second, better budgeting/cash flow results in fewer incidents of employees having to withdraw from their 401K plans. Third, because employers have a fiduciary responsibility to plan participants, providing training can minimize the risk of future lawsuits from disgruntled plan participants who have not built the nest egg they’d hoped.
Even if 401 (k) plan or pension administrative funds are not available, it is still cost-effective for employers to fund financial wellness programs out of their own pockets.  For a salaried employee making $100,000 a year, matching even one percent of their salary in a 401(k) plan costs $1,000.00.  Taking just a portion of that amount and providing a budgeting coach and hands on training will help your employees improve cash flow and provide even more investment in their plans.