In today’s market, competition for quality employees is tougher than ever. Even if you manage to secure top talent, high-level employees have options, and if they see another company with significantly better benefits, they’re likely to leave. 

One of the best ways to stand out from the competition is to offer top-notch voluntary benefits. An underutilized voluntary benefit to consider is the emergency savings account (ESA).

What Is an Emergency Savings Account?

An emergency savings account is a relatively new post-tax benefit. It allows employees to deposit a portion of each paycheck into an account that, unlike traditional retirement funds, can be accessed quickly and without penalty in the event of a financial emergency. 

Some employers offer matching contributions or set contribution percentages per month.

Why Consider Including ESAs in Your Employee Benefits Package? 

Many owners and managers are hesitant to add more voluntary benefits, especially if employee benefits are already taking up a large portion of your budget. However, if you don’t offer them already, ESAs are worth considering since they have benefits for both your employees and your company as a whole.

Secure Employees Are Productive Employees

It’s no secret that financial insecurity can be a source of tremendous worry, especially for hourly employees or those who aren’t high earners. When you provide extra security in the form of an easily accessible account, your employees’ reduced financial anxiety will likely translate to better focus and performance.

You’ll Attract and Retain Great Talent

In recent years, the demand for ESAs as a benefit has skyrocketed. However, many companies are slow to catch on. 

If you want to stand out from the crowd and draw the attention of top performers, offering an ESA as a voluntary benefit is a great way to do so. And if someone who is already employed is considering moving to a new company, they might just be enticed by this highly desirable (but still relatively uncommon) benefit.

It Doesn’t Have to Be Costly

If you’re considering offering an ESA, you might understandably be concerned with the cost. Employer matches are a draw for many employees, but depending on the size of your workforce, that might mean you’re looking at a fairly large expenditure. 

Keep in mind that when you offer ESAs, you might end up spending less than you think. For instance, many accounts have a relatively low employee contribution cap, and that means a cap on employer matches, too. 

If your budget is tight and you already match 401(k) contributions, you may be able to slightly adjust your 401(k) match percentage to accommodate the new benefit.

In addition, you don’t necessarily have to offer this benefit to all employees. Some companies offer ESAs to workers below a certain earnings threshold.

Your Employees Will Feel Supported and Appreciated

Most companies that now offer ESAs as a voluntary benefit do so because of the increase in employee demand. Much of America’s workforce deals with some level of financial instability, and ESAs help them at least somewhat improve that situation. 

If you offer ESAs, you’re communicating to your employees that you’re attuned to their needs and care about their well-being.

Are There Any Downsides to Offering ESAs?

Every voluntary benefit has potential downsides. Here are some to consider when weighing whether you should offer ESAs:

• It will be up to you to ensure the plan you offer meets all legal regulations
• Some ESAs have a cap on how much employees can contribute
• For some employees, understanding how their money is stored in retirement accounts versus ESAs can be confusing
• In the case of employer matching, costs may be incremental and hard to keep up with

However, in most cases, the benefits of ESAs outweigh the drawbacks for employers and employees. For a relatively small increase in your benefits budget, you’ll find that you attract and retain quality employees who remain productive on the job.

Create a Benefits Package Top Talent Can’t Turn Down

At AssetHR, we’re in the business of supporting your business, and part of that is offering you flexible benefits packages that let your employees choose the benefits they want. With the right benefits, you can draw quality employees without going over budget. 

Are you unsure what employee benefits your company should offer? Get in touch today to speak with one of our consultants.

Posts that the posts are not intended to provide legal advice and that readers should consult with their attorneys on any matter covered in the article.