Thought leadership

Worker finances are stretched. The majority of employees worry about their ability to save for retirement and meet a financial emergency. Employers want to help. But how? Balancing the Now with the Next explores the factors employers should consider as they think about how to help employees improve their finances – from exploring new types of savings accounts to using existing retirement savings plans in new ways.

A large spike in unemployment leads to an increase in withdrawals from retirement savings. Sponsors should take action now to preserve retirement security.

When large companies announce layoffs, what is often missed in the news is the true cost of 401k loan defaults by those employees affected.

Over the past two years, plan sponsor and defined contribution industry focus on leakage of participant assets out of the qualified plan environment has increased dramatically

The U.S. may have just reached the longest economic expansion on record, but the news underneath the headline numbers is not all about growth.

This year, we’ve seen some evidence that, after a period of uptick during and after the financial crisis, loan activity in 401(k) plans has subsided slightly in what has been a very strong economy. Just last week, Fidelity reported that 20.1% of participants have loans outstanding, down from a peak of 22.6% in 2013. Earlier this year, T. Rowe Price reported that 22.5% of participants have loans outstanding.

On July 31, we worked with Employee Benefits News on an educational webcast, “Is Your Loan Program Getting in the Way of Financial Wellness?” There’s a very strong link between plan loans and financial wellness.

In their latest “How America Saves” report, Vanguard highlights that only 4% of participants terminating with an outstanding loan are using ACH repayment. Some in the industry are citing extended repayment as a way to prevent loan defaults—but this minimal uptake suggests limited impact.