Why HR should consider offering an emergency savings account benefit

Like the Road Runner from Wile E. Coyote, financial security still eludes many employees.

Some 54% of employees surveyed by Betterment in October 2022 said financial anxiety has impacted their ability to focus at work. And 47% said an employer-sponsored emergency fund would “entice” them to change jobs.

And yet, just 2% of employers offer emergency savings accounts (ESAs), according to the Society for Human Resource Management’s 2023 Employee Benefit Survey.

The nuts and bolts. ESAs are post-tax savings accounts that can be funded by employers and employees. As the name suggests, Robertson said, these accounts are designed to provide employees a nest egg to cover unexpected, emergency expenses.

“Because [ESAs] are not [Employee Retirement Income Security Act] plans, they’re not restricted in terms of their utilization, much like a regular benefit,” Kevin Robertson, chief revenue officer at HSA Bank, told HR Brew. “Employers can use ESAs broadly and roll them out to all employees or they can use them in a more targeted fashion and focus on lower wage earners, or hourly versus salary, or geographically.

Thanks to legislation like Secure 2.0, employers can enroll their employees in ESAs that are linked to their retirement accounts, the New York Times reported. The law’s complicated rules have, as the Times noted, been a barrier to adoption for some employers, for whom a standalone ESA may be a simpler solution.

The bottom line. Given the potential impact that financial insecurity can have on employee well-being and retention, HR pros might want to consider advocating for their organization to offer an ESA.

“Employers have a vested interest in [their employees’ financial wellness] and [ESAs] are something that allows them to differentiate themselves in the marketplace [and] really demonstrate their commitment to the well-being of their employees,” Robertson said.

“There’s so much need for employers to provide for [employees’] financial well-being,” he said, adding, “An ESA can do that for employees and then ultimately benefit their employers.”