Financial benefits trends to consider in 2023
As labor shortages and other economic concerns persist into 2023, employers are stepping up their strategies to attract and retain employees and finding more ways to support their financial needs. Let’s take a look at five trending benefits that are helping employers enhance their workplace financial wellness programs while giving their companies an edge as they compete for talent.
Lifestyle Spending Accounts
A Lifestyle Spending Account (LSA) is a customizable post-tax benefit that can help employees pay for qualified expenses related to physical, financial and emotional wellness. Employers design LSAs to best meet the needs of their workforce, such as deciding how much to put in the account and what types of expenses to include.
For example, to encourage more employees to come into the office, employers could consider a gasoline reimbursement. Or, if lower-wage earners are struggling to cover basic living expenses, they could think about including utility bills as an eligible expense. Employers can also decide if employees need to take action prior to earning funds in an LSA, such as completing an online training module or wellness check.
Student loan assistance
One in three employees may struggle with student loan debt.1 In fact, Americans hold $1.7 trillion in student loans with an average balance of $28,950.2 To help tackle this challenge, the recently passed SECURE 2.0 Act will allow employer matching 401(k) contributions based on employees’ qualified student loan payments (in years beginning after 12/31/23). Another way employers can help their employees with student loan obligations is to consider converting paid time off to student loan repayment dollars. In addition, offering easy access to educational resources and repayment or refinancing tools can also help employees manage student loan debt.
Employers are also using automatic re-enrollment programs to improve retirement plan participation and contribution rates—which can ultimately lead to better retirement readiness of their workforce. Employers can choose to automatically re-enroll existing non-participating employees into a 401(k) plan. Employers can also consider including participants who are contributing at rates below the automatic default rate and/or plan match. While these individuals are already enrolled, automatically increasing their contribution rate to the minimum automatic default rate and/or plan match can help participants work toward their retirement savings goals.
Retirement income solutions
There is increasing interest in offering education and tools that can help employees make more informed decisions about how to draw down income in retirement. Assistance with retirement income strategies can help address employee concerns about income to and through their retirement. And for plan sponsors, keeping retirement assets in-plan can help provide greater scale and fee advantages. It can also help better track retirees to help reduce the number of missing plan participants.
Expanded, holistic education and resources
A holistic approach to financial wellness helps connect the dots across employees’ lives so they have a broader, clearer picture of their financial status and can make better decisions today about their futures. Because financial, emotional and physical well-being are all interconnected, employers are embracing programs that go beyond financial topics to support employees’ overall well-being. In fact, employers who offer mental and physical wellness resources are seeing noticeable improvements in employee productivity (50%), stress levels (43%), morale (41%) and creativity (36%).3
Talk with your Bank of America representative about these benefits and other strategies you can use to enhance your workplace program.
1 Federal Reserve, Economic Well-Being of U.S. Households in 2020, May 2021.
2 Federal Student Aid, 2Q 2021.
3 Bank of America 2022 Workplace Benefits Report.