Even though COVID concerns are fading, new concerns over inflation and economic uncertainty are adding to increased financial stress among employees, who increasingly are looking to their employers for support and guidance, including with retirement planning.
In fact, today’s economic environment, in many ways, may be more perilous than at the height of the pandemic, according to findings from Morgan Stanley at Work’s second annual State of the Workplace Financial Benefits Study, which compares the views of employees with that of HR managers.
The study found that employees across age groups are struggling with their personal finances due to inflation and concerns of a recession. In what is a surprising statistic, Morgan Stanley found that, because of the economic impact of inflation, 62% of employees report that they have had to reduce contributions to their savings, with nearly a third (31%) reducing contributions to their 401(k) plans and more than a quarter (26%) scaling back on paying down debts.
Moreover, nearly 3 in 4 employees (71%) report that money-related stress negatively affects both their work and personal lives, up 7% from 2021. And nearly half (47%) of employees report they have either “never thought to or are unsure if they are allowed to” reach out to their employer for assistance with their personal finances.
Still, compared to last year, employees are paying more attention to their financial benefits and are looking to their employers for expanded resources and guidance. Among employees, 60% say they are paying more attention to reviewing their financial benefits and nearly all employees (96%) agree that their company should ensure it offers the best benefits available in their industry, which aligns with HR leaders’ views (97%).
Retirement Planning Benefits
Employees also say they are looking closely at retirement planning benefits. When asked which types of retirement planning assistance would be most beneficial, 48% said goals-based retirement investment planning, and 46% said access to retirement planning tools and calculators.
That said, all HR leaders say that retirement planning assistance from financial professionals is a priority in retaining employees, with 76% citing this support as a “top or high priority.” Further, 93% of employees also view retirement planning assistance as a priority when choosing where to work. Closing this gap should be considered “low-hanging fruit” in terms of meaningful improvements, according to the study.
Maximizing Benefits
Employees (84%) want their employers to be more involved with helping them through specific financial challenges, but nearly as many HR leaders say they currently are unable to assist. Despite more executives saying they are offering quality financial benefits, 84% of HR leaders (up from 78% in 2021) recall a recent time when an employee has requested a specific type of financial benefit that their current company does not offer. Most (67%) HR leaders also believe their companies are not adequately meeting employee benefits expectations.
In view of that, employers and employees agree there is more work to do. Almost all HR leaders (96%) say “their company needs to do a better job helping employees understand how to maximize the financial benefits offered to them,” an increase from the previous year (93%). Employees largely agree, with 89% saying their company needs to do a better job helping employees understand how to maximize financial benefits, up slightly from 2021 (87%).
“For employees and employers alike, the stakes today are high when it comes to ensuring employee financial wellbeing,” says Brian McDonald, Head of Morgan Stanley at Work. “In 2021 the effects of COVID were still being felt by many employees when it came to their finances, yet now in 2022, we face a new set of challenges and a very different economic environment.”
The findings in the study are based on a survey conducted between July 13–19, 2022 by Wakefield Research on behalf of Morgan Stanley at Work among 1,000 U.S. employed adults and 600 HR leaders.
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