Protecting your employees’ retirement savings to deliver financial peace-of-mind
Improve financial wellness by preventing retirement loan defaults
Your retirement plan aims to ensure every employee retires securely, yet retirement loan defaults jeopardize savings and amplify financial stress. This is particularly acute for Black and Hispanic employees, who are almost twice as likely to have an outstanding loan than the average participant. Our Retirement Loan ProtectionSM solution prevents loan default. It is an automatic, low-cost solution to shield retirement savings and improve financial wellness.
Disparities in the likelihood of participants
having an outstanding plan loan
Participants with at least 15 years of tenure*
Source: Morningstar Center for Retirement and Policy Studies, based on industry participant data 2016-2022, published 2023.
*Weighted sample, by age, gender, and race/ethnicity. Filters out salary <$10k.
The compounding benefits of retirement loan protection
Safeguard employees’ retirement savings1
Preserve employees’ hard earned savings balances and progress while preventing plan leakage
Improve financial wellness
Help keep employees engaged and on track to a secure retirement
Ease employee
stress
Give employees peace of mind knowing they have a safety net should they
need it
1Source: Bank of America “Workplace Benefits Report,” 2020
An impactful retirement benefit for employees
80%
of participants find automated, low-cost loan insurance appealing
67%
of participants would consider increasing contributions if their employer added
loan insurance
70%
of participants report feeling financially stressed and would have peace of mind knowing they have a safety net
Source: Greenwald 401(k) Borrowers study, 2019
How Retirement Loan ProtectionSM works for employees
Custodia Financial’s automated Retirement Loan ProtectionSM solution covers loan payments when participants are unable to make them. Designed to provide significant impact at a low cost, the protection is a plan feature with an option to provide employer-paid blanket coverage for all participants, based on a percentage of total plan outstanding loans. It can also be paid at the participant level as automatic enrollment with an opt-out option at the time of loan initiation, for as little as $2 per month for every $1,000 borrowed. It’s a small price to pay to prevent loan defaults, protecting plan assets and the retirement savings of your most at-risk participants.
Involuntary job loss
When participants are laid off or lose their jobs, Custodia Financial takes over their loan payments for 6, 9 or 12 months while they search for a new job.
Voluntary job change
Participants who choose to change jobs can continue to repay their loans through Custodia, allowing them to maintain their retirement savings without defaulting on their previous employer’s retirement plan loan.
Disability or death
If participants pass away or become disabled, Custodia Financial will restore their retirement plan accounts in full.
