Research Conducted over Last 18 Months Highlights Key Role of Recordkeepers in Employee Emergency Savings

Research Conducted over Last 18 Months Highlights Key Role of Recordkeepers in Employee Emergency Savings

Tuesday, December 7, 2021

Commonwealth and the Defined Contribution Institutional Investment Association (DCIIA) partnered on a series of five surveys to understand retirement plan participants’ financial needs, actions, and sentiments during the economic crisis caused by COVID-19. Commonwealth also interviewed nine of the ten largest recordkeepers to understand their perspectives on offering emergency savings products, particularly for low- to moderate-income (LMI) employees. This blog post summarizes key findings and publications from this body of research.

Emergency Savings in the Workplace

Providing an emergency savings account product through the workplace is key to raising financial security and ultimately building wealth for low- to moderate-income (LMI) workers. Emergency savings can provide an essential buffer resulting in a “softer financial landing” during an unexpected, near-term emergency expense. Plan sponsors and recordkeepers are uniquely positioned to provide quality emergency savings products to plan participants. The Defined Contribution (DC) retirement savings account may in fact be the “sidecar” for emergency savings for LMI households. 

Financial insecurity is a deep-rooted systemic problem in the United States. For those living with a household income below $60,000 a year, an unexpected expense can amount to a financial crisis. Black, Latinx, and women-led households disproportionately experience these financial insecurities due to longstanding inequities. Emergency savings is crucial to building financial security but unfortunately, millions of people lack access to these proven tools from employers, financial institutions, and other actors.

Positive Impact of Emergency Savings on Retirement Savings

Over a period of one year, Commonwealth, in partnership with DCIIA, conducted five surveys from May 2020 to May 2021 with nearly 2,500 respondents nationally. We also interviewed nine of the ten largest recordkeepers. The goals of this body of qualitative and quantitative research included to:

  • Better understand LMI plan participants financial decisions and use of retirement savings;
  • Further investigate the role emergency savings played in providing resilience and stability for LMI plan participants during the pandemic; and 
  • Understand recordkeepers’ perspective on financial security and influence their action on emergency savings.

Findings from this research included: 

  • Having little or no liquid savings increases the likelihood that participants will take or plan to take a 401(k) loan or hardship withdrawal or to pause or reduce contributions in their retirement savings.
  • Respondents with specific accounts for emergency savings had more liquid savings than respondents who save for emergency savings but do not have an earmarked account.
  • Respondents with significant emergency savings (>$2,000) are half as likely to have tapped their retirement savings.
  • Participants with low financial wellbeing scores are more likely to be interested in workplace emergency savings programs.
  • Respondents with lower incomes and who are people of color were more likely to have lost income during the pandemic.

Summary of Publications

  1. Saving Through a Crisis: How LMI Retirement Plan Participants Are Weathering COVID-19
    May 2020
  2. Saving Through a Crisis: LMI Plan Participants’ Financial Strategies During COVID-19
    July 2020
  3. LMI Retirement Plan Participants’ COVID-19 Financial Strategies, Six Months In
    September 2020
  4. Losing Income Through a Crisis: Mixed Economic Recovery for LMI Retirement Plan Participants
    January 2021
  5. Financial Stress Through a Crisis: Supporting LMI Plan Participants to Build Long-Term Financial Security
    May 2021
  6. Eye on Systemic Change in the Retirement Industry
    October 2020 – February 2021

Interviews with Recordkeepers

Commonwealth also interviewed nine of the ten largest recordkeepers and seven large plan sponsors across a variety of industries. The interviewed recordkeepers recognized the need for employee access to quality emergency savings products and most saw a role for themselves in providing it. Their top priority for offering emergency savings is to reduce loans and hardship withdrawals from retirement accounts. Plan sponsors also recognized the need for quality emergency savings products and wanted an accessible, engaging emergency savings solution from a pre-existing vendor. Findings from our interviews indicated, it is no longer a matter of “if,” but rather “what,” “how,” and “when” recordkeepers will offer emergency savings products. 


The Commonwealth/DCIIA research supports the institutionalization of emergency savings through the workplace and highlights the key role plan sponsors and recordkeepers have in providing quality emergency savings products.  Workplace savings accounts have proven to increase emergency savings. We have learned that through education and repetitive messaging, employees have internalized the idea that retirement account balances are for retirement.¹ The same can now be argued for workplace emergency savings programs with companion employee communication strategies. For LMI households, a separate workplace emergency savings account is foundational to improving financial security and ultimately building wealth.

If you are a plan sponsor or recordkeeper interested in offering emergency savings and would like to learn more about how you can support your plan participants, contact Nick Maynard at 

Founded in 2010, the Defined Contribution Institutional Investment Association (DCIIA) is a non-profit association dedicated to enhancing the retirement security of America’s workers. DCIIA’s diverse group of members include investment managers, consultants and advisors, law firms, recordkeepers, insurance companies, plan sponsors, and other thought leaders who are collectively committed to the best interests of plan participants. For more information, visit:

¹Proprietary Research, Boston Research Technologies

BlackRock’s Emergency Savings Initiative

In 2019, BlackRock announced a multi-year, $50 million philanthropic 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 Emergency Savings Initiative (ESI) is a key part of The BlackRock Foundation’s mission to help people beyond the firm’s core business to build financial security. 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 at the individual and corporate levels. Led by its Social Impact team, BlackRock is partnering with innovative industry experts Common Cents Lab, Commonwealth, and the Financial Health Network to give ESI a comprehensive and multilayered approach to addressing the savings crisis.