PLANADVISER - November/December 2019 - 22

Below are a few companies that have devised a separately
operating rainy-day savings program and either have
already or plan to make these available:
* SunTrust. SunTrust includes an emergency savings
component as part of
its
Cookie Jar rounds up any checking account and credit
financial wellness program,
Momentum onUp, which more than 200 employers have
utilized. The program puts emergency savings into the
context of a more holistic program to improve the participant's
confidence about his finances and includes both
emergency savings tools and education, Ford says. " People
do need emergency savings tools, but they also need education.
I worry that if there's too much conversation about
tools, it can leave out education. " In SunTrust's program,
employees set up an emergency account themselves, and
the employer can facilitate payroll deductions to it.
SunTrust also uses the program to benefit its own
employees. Employees who complete the program and set up
a SunTrust emergency savings account get a $1,000 employer
contribution to it. " They need to put in at least $100 to
begin and at least $20 from each paycheck after
that, " Ford says. They get $600 of the contribution
after the first six months of the program
and the other $400 after the next six months.
" Our goal is that, within a couple of years,
we'll help get them to $2,000 in their emergency
savings account, " he says.
* AARP. AARP is developing an emergency
savings program to offer employers
and hopes to do a trial run within the next
year or so, John says. He describes the model
that AARP envisions as using automatic enrollment
and a payroll deduction, with an employee's contributions
going into a bank account in his name. " The employer
could automatically enroll an employee into two different
accounts: the retirement plan account and an emergency
savings account, " he says. " The employee would have a bank
card, just like an ATM card, and could withdraw the emergency
savings money whenever he wants, for anything. "
* Split to Save. Barany likens this Consumer Federation of
America program to a " plug and play " scenario for employers.
An employer signs up for the free program, and then its
employees can access the program's website, in five minutes
setting up their participation. " It asks them to make a pledge
to save, " he says. " People identify a goal of their choice, how
much they want to accumulate, and how much they think
they could save monthly. " That monthly savings goal, once
the employee OKs it, will become a payroll deduction; the
money goes into a savings account he sets up for that purpose.
" The idea is people have split accounts: One is for spending
and one is for saving, " Barany says. " My employer could put
the majority of my pay into my checking account and then
the small amount that I want into my savings. "
* SafetyNet. The Cookie Jar program from SafetyNet Insurance
Agency LLC aims to help people get started with smalldollar
savings, says Roshni Chowdhry, head of customer
experience for the company, in Madison, Wisconsin. " Our
goal is to help people [save] in a painless fashion. " A consumer
using the program can create specific goals to automatically
save to, within his Cookie Jar savings account.
card transactions that a participant performs to the nexthighest
dollar amount, then the program's platform facilitates
direct depositing that difference into the person's
emergency account. A $9.01 transaction becomes $10, with
99 cents contributed to emergency savings. " The account
holder can access the money at any time, " Chowdhry says.
" There's no limitation or penalty for withdrawals. "
The default for new participants is a $50 savings goal,
and they can change it, Chowdhry notes. " Starting with a
modest amount gives people hope: 'Oh, I can do that.' And
before they know it, their accounts add up quickly. " Users
now elect to direct deposit into a savings account they set up,
but the company hopes to be able to integrate with payroll
systems for payroll deductions, she says. " That's our vision,
to make this as much of a no-brainer for people as possible. "
Employers using the program can match percentage
of their employees' deferrals monthly, such as 50% of an
employee's contribution, up to $50 a month.
The Outlook
It is too early to know which approaches
to emergency saving get better results,
Newville says.
" People look at the three
models and ask, which is best? Right now
we're in a place where people want to rush
to pick something out, " he says. " But the
providers need to take the time to pilot the
programs and see what these programs do to
help employees. "
Currently, employer-based emergency savings
programs do have some legal/regulatory uncertainties,
John says. For a program inside a 401(k), those include how
enrolling employees into the savings feature will affect a
plan's nondiscrimination testing and how participants will
get taxed on their emergency savings' investment earnings
when they make withdrawals. " These are things that could
be dealt with fairly easily by regulatory or legislative fixes, "
he says. " None of these issues are insurmountable. It's just
that we're trying to use a retirement-savings mechanism for
a slightly different purpose. "
Ford predicts that in the next several years, the federal
government will supply more ground rules for such
employer-based programs. " I do believe that formalizing
these programs, as we have with retirement plans,
is a
good thing. The ERISA [Employee Retirement Income Security
Act] law is great for a 401(k), but it wasn't set up for
emergency savings, " he says. " I'd like to see the government
provide more clarity for employers. If that happens, I think
we'll see a revolution in emergency saving in America. "
Dalessio stresses that advisers should " get involved in
this, because employers' needs are getting broader. Historically,
the retirement industry has been focused on its silo: We
looked at our vertical market in totality. But now, the conversation
with employers is getting bigger: All the pieces [of
employees' financial lives] are coming together. The winners
in the plan advisory space will expand the breadth of the
capabilities they provide to clients beyond the 401(k) and
evolve to more of a financial wellness platform. " -Judy Ward
22 | planadviser.com November-December 2019
http://www.planadviserdigital.com/planadviser/november_december_2019/TrackLink.action?pageName=22&exitLink=http%3A%2F%2Fplanadviser.com
PLANADVISER - November/December 2019

Table of Contents for the Digital Edition of PLANADVISER - November/December 2019
