Employee financial wellness has improved dramatically over the past year.
The latest Bank of America Merrill Lynch Wellness Scorecard found that 401(k) plan features like automatic enrollment, auto escalation and age-based default investments and guidance are having a very positive impact on employee financial wellness.
During the first quarter of 2013, more than 26,000 employees were automatically enrolled in 401(k) plans serviced by Bank of America Merrill Lynch and only 7 percent opted out.
Many employers have taken a wait-and-see attitude toward automatic increases, but adoption grew substantially during the first quarter, growing 9.5 percent from 189 to 207 plans using the feature, and 9.3 percent growth in the number of employees taking advantage of this feature in their plans.
Health savings accounts have also done well this year, with many employees approaching HSAs like they would their retirement accounts; they are planning ahead for increased health care costs.
The shifting of responsibility for health care costs/planning from corporations to individuals – much like retirement planning has during the past three decades – will present workers with major challenges. Health insurance premiums have doubled since 2002 — a growth rate three times faster than wages — putting pressure on employees’ financial wellness.
The total assets in Bank of America HSAs grew by 48 percent between January 2012 and January 2013. As of March 31, Bank of America holds 234,000 active/funded HSAs, a 68 percent increase since the beginning of 2011.
Year-over-year, average HAS balances have continued to grow, from $1,741 in 2011 to $2,029 in 2012 and $2,093 in 2013. This growth can be attributed to increases in account use among employees of existing corporate clients, users contributing more to their accounts and carrying balances forward and new relationships with individuals and employers.
The Wellness Scorecard also found that improved 401(k) benefits also do a good job in retaining employees.
The company found that out of 2.1 million employees who were eligible to participate in plans served by Bank of America those who don’t participate in the 401(k) have a turnover rate double that of the employees who do participate in their retirement plan.