Help Employees Make Ends Meet: Increase Participation in Retirement Programs by Providing Training in Day-to-Day Finance Management

By Patton, Carol | University Business, May 2015 | Go to article overview

Help Employees Make Ends Meet: Increase Participation in Retirement Programs by Providing Training in Day-to-Day Finance Management


Patton, Carol, University Business


What types of people at your school are not saving for retirement? Young employees? Low-income earners? Maybe single parents with children?

Several years ago, Linda Nilsen needed to know. As the executive director of benefits and compensation at Princeton University, she analyzed the non-savers--about half of the school's 6,000 employees. To her surprise, there were no trends, no themes, no commonalities. These individuals represented all ages, salaries, departments and positions.

HR brainstormed ways to reach them and came up with a fresh approach: Instead of targeting these individuals directly, it introduced financial wellness classes--some in Spanish--for employees at all levels.

It's no news that Americans are lousy at saving and great at spending. According to a recent poll by Bankrate.com, more than a third of adults surveyed had not started saving for retirement. Based on an analysis of Federal Reserve statistics and other government data, the average household owes $7,283 on its credit cards.

Schools typically offer financial wellness programs to employees at the higher end of the income or education spectrum. Information focuses on more sophisticated topics like investment strategies or tax planning. However, some employees can't worry about tomorrow. They're too stressed about today, wondering how they're going to afford the next car payment or pay their rent.

Ground level

Some schools are starting from the beginning--the very beginning--in helping employees minimize financial stress and be more productive at work. Schools are introducing entry-level financial wellness classes that teach employees everything they need to know--from what a credit score is to saving for emergencies. By arming them with financial information, tech tools and healthy fiscal practices, employees no longer have to struggle, living paycheck to paycheck. Investing in their future is now a reality.

What's unusual about Princeton's 30- to 60-minute introductory classes--which include basic budgeting--is that department heads often request them to be conducted during staff meetings.

"Those have been our most successful meetings because everyone is there," says Nilsen. The university avoids a conflict of interest by hiring one firm to conduct entry-level classes and another to address advanced topics, she adds.

"Anecdotally, people have been able to improve their credit rating or buy a home they never thought they could," she says. "It tells you we're doing something right."

Princeton's HR department started noticing a difference after introducing online auto-enrollment for its retirement plan. Participation jumped from 50 percent to 80 percent, she says, which is really impressive since the plan doesn't offer a matching contribution.

Changing attitudes

In 2013, Chicago State University started targeting low-wage employees and campus community members with help from a five-year, $560,000 grant from the U.S. Department of Education.

The grant's purpose is to generate awareness about preparing for retirement, says Philip Aka, professor of political science at Chicago State.

"Were trying to say that regardless of how much you make, you can save money," he says. So far, the university has conducted four free on-site workshops on basic money management concepts and strategies such as compound interest.

But this effort has been especially challenging, since the school is located on Chicago's south side, where the crime rate is sometimes quadruple the national average, he says. …

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