There’s a growing wave of litigation towards organizations that don’t fully understand their obligations as sponsors of a Defined Contribution Plan. This shift has a lot to do with the increasing number of baby boomer retirees.
This demographic was the first to experience Defined Contribution Pension plans for the majority of their careers – especially in the private sector. As their elder coworkers accumulated years of service in Defined Benefit plans, younger boomers were left to be the sole caretakers of their retirement accounts, navigating the murky waters of recession, volatile markets, and changing policies to tax, investment, interest rate and borrowing. It’s no wonder that evidence points to the inadequate retirement savings that pre-retirees had thus far managed to accumulate.
By offering a comprehensive employee financial wellness program, employers can better help their employees meet their retirement goals and avert possible litigation. A truly comprehensive program goes beyond focusing on the particular features of their pension plan, or on how to become a better investor. It encompasses all aspects of financial planning, including: cash management, debt, tax, government retirement benefits and estate planning. By empowering employees with the knowledge needed to create a plan for their own optimal retirement outcome, they can better understand the far-reaching implications of their actions – or inactions. Engaging a third-party provider to oversee this service not only ensures your employees will benefit from having skilled adult educators, it also shows would-be litigators that you’ve made efforts to go above and beyond the bare minimum to help your employees achieve financial success.
There are other benefits to organizations that embrace comprehensive workplace financial wellness. Not only is it a demonstration of proper governance and prudent risk management against impending litigation, research indicates that there are measurable boosts to productivity. A 2019 Employee Financial Wellness survey put out by PricewaterhouseCoopers LLP stated that 59% of employees surveyed cited financial matters as their top cause of stress, leading to under performance at work.* Because of this, more employers are providing their employees with financial education services to assist them with personal finances. 71% of those with employer-provided services say they’ve used the benefit, and those numbers have increased in recent years, particularly among millennials and baby boomers. Imagine the positive impact to our entire economy – and our society – as more organizations embrace the employee financial wellness movement.
Roland Chiwitelu, Financial Consultant, Financial Education & Employer Services
T.E. Wealth, Toronto
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