Behind the Scenes: How Commonwealth Partnered with UPS and Voya to Achieve an Emergency Savings Milestone

Behind the Scenes: How Commonwealth Partnered with UPS and Voya to Achieve an Emergency Savings Milestone

Thursday, November 12, 2020

Recently, UPS announced the launch of an emergency savings program providing employees a way to set aside liquid after-tax savings easily and automatically. The program gives 90,000 non-union employees the ability to divert a portion of their paychecks into rainy-day funds within their 401(k) plans—a critical boost to employee financial security in the midst of a pandemic.

According to The Wall Street Journal, with the program, UPS becomes “one of the largest U.S. employers to join a trend that reflects concern over the impact of workers’ financial problems on their ability to retire.”

Even as employers increasingly recognize the widening and costly issue of employee financial stress—an estimated $250 billion in lost productivity, absenteeism and health care costs—many find it difficult to identify an effective way to help their employees save for emergencies. To identify the optimal emergency savings option for its employees, UPS joined BlackRock’s Emergency Savings Initiative to tap the expertise of industry experts. With a proven track record of working with large partners to implement innovative savings solutions at scale, Commonwealth was proud to partner with UPS to develop the program from initial concept to launch.

How We Did It: Linking Arms to Identify and Design a Solution

When UPS first approached BlackRock’s Emergency Savings Initiative, they recognized that many of their employees lacked emergency savings, in line with the broader trend in the US. A majority of UPS plan participants who took Voya’s financial wellness assessment have less than three months of expenses saved for an emergency, and that percentage increases for employees with lower household income. To determine the right solution for this short-term savings need, Commonwealth shared its research on the essential features of quality emergency savings products with UPS and advised on selection criteria. Together, Commonwealth and UPS narrowed the list of solutions, navigated business constraints, and eventually landed on engaging UPS’ retirement plan provider, Voya Financial.

With their robust financial wellness assessment data, Voya was aware of the need for employees to build emergency savings and was eager to act. Voya and Commonwealth proposed that UPS leverage the after-tax account within the 401(k) plan to allow for easy, automated savings directly from payroll. Commonwealth collaborated with Voya from concept to implementation, devising a user journey to engage employees on emergency savings with a link directly to Voya’s participant website for those ready to take action. Commonwealth also leveraged its past research and experience to advise Voya on messaging to encourage employees to start building emergency savings. The firms will continue to collaborate to iterate on messaging and measure impact.

A Milestone for Employer-Sponsored Emergency Savings

UPS’s employee emergency savings program is a significant recognition of the employer’s role in their employees’ financial security. It’s also a role that employees increasingly expect employers to play. Commonwealth’s national survey of working Americans found that 65% of respondents believe employers should be doing more to help with financial security. In addition, according to AARP, 7 in 10 employees surveyed said they would be likely to participate in payroll-deduction short-term savings programs.

Taking steps to support financially vulnerable employees has never been more critical. Industry actors can take various approaches to solve the emergency savings crisis. In this case, Commonwealth collaborated with UPS and Voya to develop an “in-plan” emergency savings solution. Emergency savings products can also be offered outside of retirement plans (known as “out-of-plan”) by fintechs or financial institutions—these plans can now include auto-enrollment as a feature, if piloted with the CFPB. Employers, financial institutions, and other industry actors have an important role to play in offering high-quality emergency savings solutions to improve the financial security of hard-working Americans.

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.