Introducing Veteran Ready Financial Well-Being Programs
As part of your Diversity, Equity, and Inclusion (DE&I) strategy, your organization, like many others, is likely developing a plan to attract and retain veteran talent. Many organizations have adopted dedicated veteran employee relations groups, specialized talent acquisition teams, or tailored onboarding programs. Perhaps overlooked, the financial well-being benefits you offer can add significantly to the success of these efforts.
Financial health is an important subject for everyone, but it can have some unique aspects for veterans. Despite the dedicated financial resources available to service members while serving, the transition to civilian life after years in the service can affect their short and long-term financial stability.
There are several noted reasons this may occur. Veterans have likely dealt with relocations, deployments, a lack of employment opportunities for their spouses, and, of course, war-related trauma. All of that can leave them vulnerable in certain aspects of their financial health.
That’s why veteran employees can use your help. Research published in 2020 by the research and advisory company Gartner, Inc. shows that veterans want three main workforce financial benefits– financial planning, financial education, and debt management.
With that in mind, SoFi at Work has published our Guidebook: Are your financial well-being benefits veteran-ready?” to help HR and Total Rewards leaders design a meaningful and impactful program to support your veteran workforce.
The complete guide is available for download from our website, but here are the core components that we recommend be included in a veteran-ready financial well-being program.
Student Loan Employer Contributions
Even with the Department of Veterans Affairs’ support, veteran undergraduate students take out student loans to complete their education . The fact of the matter is the cost of education has outpaced the support of programs that the GI Bill and SCRA Interest Cap offer service members, resulting in the need for additional federal student loans. And veterans, who are often working and raising families while going to school, may take longer to finish degrees, meaning certain benefits will have expired before their coursework has been completed.
According to research conducted by the Consumer Financial Protection Bureau (CFPB)on veterans’ financial well-being, veterans with student loan debt have a lower perception of their financial well-being than their peers who don’t have student loan debt.
This is why well-designed employer-sponsored student loan offerings are critical for a successful veteran-ready financial well-being program. While there are several military student loan repayment and forgiveness programs, try to avoid the mistaken thinking that your veteran employee’s needs are fully met. Many of these programs are for fully disabled veterans only. Others have other specific and sometimes complicated restrictions.
It is important to note that in early October, the Department of Education announced some major changes that will make it easier to qualify for the Public Service Loan Forgiveness Program (PSLF), including removing several barriers that had prevented military service members from taking advantage.
Another crucial legislative milestone was the change in classification of Sec. 127 Education Assistance Benefits, so now employers can support employees with direct student loan payments in the same tax-advantaged way they have supported tuition reimbursement for years. These changes allow employers to province up to $5,250 tax-exempt annually toward a qualified employee’s student loan repayment through 2025.
Employers can help with student loan payment programs, which are growing in popularity partly thanks to new government regulations implemented during the pandemic. Now employers may provide up to $5,250 tax-exempt annually toward a qualified employee’s student loan repayment through 2025.
Emergency Savings Programs
Veteran financial wellness also suffers among those who have less in liquid savings or feel they could not absorb an unexpected financial shock, according to the CFPB survey. This suggests that employers can help relieve this potential financial stress through automatic emergency savings programs.
These plans allow employees to contribute after-tax payroll deductions automatically into a customized savings account. Many employers also make matching contributions, much as they might with a 401(k). Depending on plan design, these funds can be available at any time and for any reason. In addition, most Emergency Savings Accounts (ESAs) are portable, meaning that veterans and other employees can take advantage of the program and retain its benefits even when they have a change in employment.
These programs gained popularity during the pandemic when it became painfully evident that many employees were not financially ready for an emergency.
The same may hold for veterans transitioning to civilian life. When employers offer a trusted and easy way to save, they can help veterans with this transition.
Help with Debt and Negative Credit Events
Another factor that impacts veteran (and all) employee financial well-being is high-interest debt. While the intention might have been to keep this for a short period, many Americans face challenges with paying down that debt over time. These and other factors can have a negative effect on their credit rating, increasing the chances that they will be rejected for a variety of credit instruments. This type of adverse credit event causes a significant drop in veteran financial-wellness perception, according to CFPB research. Here are some ways employers can help support employees facing negative credit events:
• Debt and Financial Coaching: Offer one-on-one debt repayment and budgeting counseling, including budget and spend tracking programs to help balance monthly necessities, debt repayment, and discretionary spending.
• Some Early Paycheck Programs: Not all of these plans are created equally, but a well-designed early paycheck program can help employees meet short-term financial needs without having to take out debt with excessive fees or interest rates.
• Credit Score Monitoring: Provide free credit score monitoring services and counseling to help veterans rebuild damaged credit scores or build new credit.
Balance Short-Term Needs and Long-Term Financial Goals
While we have mostly discussed programs that are designed to support the shorter-term financial needs of veteran talent, it is important that your overall program also helps veterans get ready for their top financial goal: retirement readiness. As Gartner found, veterans are 48% more likely to list getting ready for retirement as a personal goal than their nonveteran counterparts. Since they may be eligible for additional benefits, like pensions, this is another reason to include professional financial coaching or planning in your overall financial well-being strategy to support veteran talent navigate the increasingly complex retirement landscape.
It’s essential to analyze your workforce—and the talent you’re looking to hire—to understand what programs will best serve your veteran employees’ needs. But implementing a few hallmark programs of a veteran-ready financial well-being program can help you improve the overall financial well-being of your veteran workforce and help you attract and retain talent in this competitive landscape.
Photo credit: iStock/SDI Productions
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