Action Steps an Employer Can Take to Support Gen Z in Saving

Editor’s Note: This is part II of a two-part series. Part I is available here. 

Generation Z is looking ahead and shows a healthy regard and respect for their financial future, long-term. Studies show that they have a strong interest in financial literacy, saving and employer-provided retirement benefits. 

Members of Gen Z also expect to spend 30 years in retirement, according to the Transamerica Institute. At the same time, Transamerica also says that a majority—57%— of the members of Gen Z they studied agree that they need to save more for retirement. 

So what should employers do with that information?

Opportunity 

Given the interest of Gen Z in employer-provided retirement benefits, actions by an employer could further support and deepen the interest of members of Gen Z in saving and laying the groundwork for their long-term financial stability and security. Transamerica’s results support that notion; they report that two-thirds of the members of Gen Z they studied were saving through employer-sponsored retirement plans or saving outside of the workplace.

A strong majority of Gen Z members—70%—are interested in choosing their own benefits, according to People Keep.

But that doesn’t mean that their interest translates to a sense that their views matter nor that benefits are worth the money. People Keep also found that only 36% of the Gen Z survey participants believe what they think matters regarding the benefits their employer offers. And just 38% consider their benefits to be worth the cost. 

That suggests that employers have work to do, but it also spells opportunity—to build good will among Gen Z employees, which can enhance recruitment and employee retention, as well as better help Gen Z employees to prepare for a secure retirement. 

Student Loans 

A significant proportion of Gen Z is interested in employer assistance with their student loans, People Keep found. And Steve Fussell, executive vice president for human resources at Abbott Laboratories, has warned that employee focus on paying down student loan debt can come at the expense of their saving for retirement—and that just as retirement savings can compound and grow, so too can the detrimental effect of holding back on retirement saving due to making paying off debt a higher priority than saving. 

Onedigital in “New Opportunity: Matching Contributions for Student Loan Payments” calls the December 2022 enactment of the SECURE 2.0 Act “a game-changer” regarding student loan benefits. Now employers can offer employees matching contributions to their retirement accounts based on employees’ qualified student loan payments. 

SECURE 2.0 does not require employers to offer such a benefit, Onedigital notes. But they suggest that an employer may want to, arguing that those that do, and do so before their competitors, may “have a leg up” on them—and thereby better position themselves to attract and keep good employees. 

Bill Gimbel, president of LaSalle Benefits in Northbrook, IL, in an interview with the Society for Human Resource Management (SHRM) indicates that Onedigital is correct. “Unless you're offering student loan forgiveness, [new graduates] aren’t looking for anything else,” he told them. 

Loan Laboratories 

Abbott Laboratories is an employer that has taken that advice. They have put in place their Freedom 2 Save program, through which both full-time and part-time employees who (1) qualify to participate in the company’s 401(k) and (2) also contribute 2% of their pay toward student loan debt through payroll deductions receive an amount equal to Abbott’s 5% 401(k) match; those amounts are contributed to their 401(k)s. 
https://www.abbott.com/corpnewsroom/strategy-and-strength/tackling-stude...

Abbot Laboraties employees who participate in the program do not have to contribute to their 401(k)s. Prudential Retirement began offering such a benefit in 2016, well before SECURE 2.0 was enacted. 

Fidelity, too, has developed a student loan payment benefit it makes available to plan sponsors, according to Ignites.  has rolled out a Secure 2.0-inspired offering for plan sponsors, “Student Debt Retirement,” the firm announced Monday. Through it, employers can match employees’ student loan payments with contributions to their retirement plans.

Additional Steps 

There are other benefits an employers can offer members of Gen Z that they may find attractive, Gimbel suggests, such as: 

• providing a financial planner with whom they can consult;
• providing access to online financial services; and 
• putting in place a means by which they can make loan payments through automatic payroll deductions. 

In a similar vein, according to Forbes, FINRA Foundation President Gerri Walsh argues that employers should understand the investing decisions Gen Z makes, and should provide educational tools that will help them prepare to make those decisions.