Even before the pandemic, we knew that close to half of Americans would have trouble finding $400 to cover a financial crisis. For many, the pandemic has worsened their situation. Forward-thinking employers are now in a unique position to help them save. New policy guidance from the CFPB, secured by Commonwealth as a part of BlackRock’s Emergency Savings Initiative, opens the door for employers to develop and implement Autosave for Emergencies (Autosave), automatic enrollment into short-term emergency savings accounts.
In our webinar 5 Things to Know about Autosave for Employers, Arielle Miller, Emergency Savings Project Lead at BlackRock, and Jason Ewas, Senior Policy Manager at Commonwealth, presented the Path to Autosave and offered 5 steps to how employers can submit a CFPB CAST application for a groundbreaking Autosave program.
1. What is Autosave?
Autosave for emergencies involves an employer automatically enrolling an employee into making automatic contributions into an emergency savings account the employer chooses. An employee can also choose their own savings account or opt out of the program. Jason Ewas pointed out that in Commonwealth research, “lower-income employees reported that employer interventions (such as savings tools) at the time of a raise would reduce stress, enhance productivity, and increase the likelihood they stay with the company.” Employees trust their employers and autosave opens up a path for employers to support employees.
2. Why is it a promising solution?
Arielle Miller named that while this is a “first of its kind” offering, Autosave takes a proven solution rooted in behavioral science and puts it into practice to drive emergency savings for those who need it most. Retirement plans that use auto-enrollment/opt-out have nearly double the participation rates of plans that use opt-in. Auto-enrollment removes the friction for the employee looking to save and shows the potential to dramatically increase employee participation.
3. Who can do it?
A few months ago, the CFPB approved Commonwealth’s application for a CAST Template. This template gives employers a clear pathway to develop an Autosave program that will comply with Regulation E. By using the CAST application, any employer can now submit a CAST application and describe how their specific autosave program will meet the CFPB’s basic requirements. If the employer’s CAST application is approved, the employer will have a regulatory “safe harbor” in relation to Regulation E. The CFPB is interested in issuing this safe harbor because it’s a regulatory gray area and to learn whether the innovation creates consumer benefit or whether it has potential to create consumer harm.
Arielle Miller pointed out that while “an innovative employer can raise their hand and drive, we’ve learned that almost no one employer can build and implement a solution alone.” Financial institutions, fintechs, and payroll providers also have a role to play in making Autosave for Emergencies a reality. Financial institutions can design consumer-centric products and equitable processes that will make Autosave easy for employers to implement.
4. Where should an employer start?
An employer can start the process by taking a look at the CAST Template, which will outline the core features of an autosave program. Beyond the CAST template, employers will need to account for federal Know Your Customer laws as well as state payroll law.
Commonwealth understands the importance of partnerships and is here to work with employers and ecosystem players to develop solutions. Jason Ewas outlined that Commonwealth is prepared to support employers “through the application process, from initial conversations, to designing a program, to submitting a CAST application, to implementing a program.”
5. How can an employer learn more?
Autosave for Emergencies is a compelling way for employers to drive emergency savings, and the CAST application makes it possible for them to act. Commonwealth can support employers in understanding the process. Jason Ewas underscored that “we know that this is a process, and we certainly don’t expect firm commitments immediately. But if you think ‘my company may be a good fit, but I have questions’ or ‘my organization could develop a tool to make this easier, but I have questions,’ you should reach out to us.”
Any employer interested in implementing Autosave for Emergencies can visit Commonwealth’s website for more information or reach out to Jason Ewas at firstname.lastname@example.org for personalized guidance on moving forward.
BlackRock’s Emergency Savings Initiative
BlackRock announced a $50 million commitment to help millions of people living on low to moderate incomes gain access to and increase usage of proven savings strategies and tools – ultimately helping them establish an important safety net. The size and scale of the savings problem requires the knowledge and expertise of established industry experts that are recognized leaders in savings research and interventions on an individual and corporate level. Led by its Social Impact team, BlackRock is partnering with innovative industry experts Common Cents Lab, Commonwealth, and the Financial Health Network to give the initiative a comprehensive and multilayered approach to address the savings crisis. UPS, Uber, Mastercard, Etsy, Brightside, Arizona State University, and Acorns have joined BlackRock’s Emergency Savings Initiative to help their employees, customers, gig workers, and college students take the essential first step toward long-term financial well-being.