Is debt management the new benefits frontier?

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Helping employees manage their unsecured debt (credit card, medical, and personal loan debt) could help employers attract and retain top talent In today’s high-turnover environment. Indeed, offering a benefits package that doesn’t feature debt-related financial wellness benefits may not be enough to promote workers’ wellbeing, productivity, and satisfaction. 

Survey data shows a benefits gap

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

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

While employees’ unsecured debt is causing significant impacts on their wellbeing and productivity, responses to the survey revealed that workplace benefits packages are currently falling short when it comes to providing employees with 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, fewer than 40% of respondents said their employer offers the benefit.
  • One in five respondents said they didn’t have 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 don’t have access to debt-related benefits, despite reporting higher levels of debt stress.

Designing debt-related benefits to meet workers’ needs and preferences

The good news for employers looking to address the benefits gap revealed in the survey is two-fold. First, employees expressed clear and actionable preferences about the benefit features that would be most helpful to them. Second, survey responses indicate that offering useful debt-related benefits will pay dividends to employers in terms of employee wellbeing and satisfaction.

When it comes to designing debt-related benefits, employees place a high value on confidentiality assurances. Employees, particularly those with higher unsecured debt and those with lower incomes, reported worrying about what their employer would think if they knew how much debt the employee has, for example. When designing debt-related financial wellness benefits, employers and HR teams should emphasize confidentiality practices and ensure that employees’ debt loads are not revealed to their managers or employers. 

 In addition to confidentiality assurances, employees value ease of access, clear explanation of benefits, and availability of personalized help when considering whether to participate 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 wellbeing and satisfaction.

  • 63% of respondents said access to debt-related financial wellness benefits would reduce their stress.
  • 68% said that debt-related financial wellness benefits are important for an employer to offer. 
  • 62% said they would be more likely to stay at a job that provided debt-related financial wellness programs that were useful to them. 

The takeaway

Employers have an opportunity to close the gap between employees’ need for debt-related support and the workplace benefits available to them. By leveraging these recent survey findings (or by suggesting that employers conduct their own surveys of their workers), HR teams and benefits professionals can start identifying where companies’ current benefits offerings fall short. Armed with this information, they can suggest supplemental products and services designed to help workers manage their unsecured debt and avoid taking on more debt. It’s time for workplace financial wellness benefits to go beyond the standard offerings of retirement savings and health insurance, and debt-related benefits are a great place to start. 

Amelia Josephson is Senior Manager, Innovation, at Financial Health Network