Credit card, automobile, housing, medical, and student-loan debt are creating high levels of financial stress for many Americans, negatively affecting their ability to participate in employee-benefit programs and adequately prepare for retirement. The City of Memphis is taking steps to help its workers manage their debt and achieve financial security with financial wellness programs.
During the 2022 Spring Policy Forum hosted recently by the Employee Benefit Research Institute, Alex Smith, chief HR officer for the City of Memphis, described some of the programs the city has put in place to help its workers manage debt, potentially improve their work engagement, and enhance their retirement planning.
According to Smith, the purpose of the City of Memphis is to build an engaged workforce that will work to improve the quality of life for all of the people of Memphis, every day. To help its workers manage their debt obligations and reduce financial stress, the City of Memphis offers several innovative financial literacy and financial health programs, which Smith described. These programs include:
Free Financial Counseling. This program provides one-on-one counseling with a financial advisor, in-person and virtual workshops on a variety of topics, including establishing and increasing credit scores, creating a budget, money management, and home ownership. According to a 2021 overview of the program, Smith said, 74% of employees saw an improvement in their credit scores and 33% of employees achieved a score of 660 or above and a +15 point FICO-score change.
Student Loan Contribution. The City of Memphis offers student loan contributions in the amount of $50 a month to its employees. To qualify for this program, employees must work full time and have 12 consecutive months of employment. In 2021, Smith said, 522 employees were enrolled in this program, which has generated over $313k in savings ($600 in savings annually per employee).
Tuition Reimbursement. Employees who are eligible for this program can receive assistance with tuition and fees of up to $3,000 for undergraduate/graduate degree programs and $2,000 for certificate programs per fiscal year. From 2020-2021, 175 employees were enrolled in the program, and reimbursements totaled more than $422k.
Membership in Memphis Employee Credit Union. The City of Memphis provides new employees with a free savings account and free membership in the Memphis Employee Credit Union. There is also a $100 offer to new checking account members, as well as direct-deposit and payroll-deduction opportunities.
Members of the credit union also have several account options, including IRAs, money market, and CDs. In addition, they enjoy low interest rates on automobile, mortgage, and debt- consolidation loans.
Retirement Support Program. Under this program, employees receive a variety of services, including one-on-one counseling for assistance with retirement plan enrollment, investing and account reviews.
In addition, they get help with debt reduction before they retire and access to a full-service, financial-wellness website that features topics on retirement transitioning, smart spending, savings, investing, and estate planning. Employees also are provided with a retirement calculator to determine how much money they will need to cover their desired retirement lifestyles.
During her presentation, Smith suggested several steps organizations can take to effectively transform the debt-management programs they offer to their employees. Smith recommended organizations challenge the status quo, conduct a needs assessment of their employees to determine their specific needs and wants, build effective partnerships, engage in purposeful communication with all stakeholders, and always strive to be flexible and adaptable.
Ayo Mseka has more than 30 years of experience reporting on the financial-services industry. She formerly served as Editor-In-Chief of NAIFA’s Advisor Today magazine. Contact her at [email protected].