Even in “good” times many employees face major hurdles when confronted with unexpected expenses and how to pay for them. With the impact of the Coronavirus pandemic on employee paychecks, those hurdles are even higher.
Prior to the pandemic, industry statistics showed that 78% of U.S. employees were living paycheck-to-paycheck. Alarmingly, most workers don’t have as little as $400 in emergency savings for unexpected expenses and struggle to make minimum monthly payments on credit cards and loans. The result is financial stress which employees often bring with them to work. This leads to low productivity, more absenteeism and, in many cases, higher healthcare costs, all of which affect the employer’s bottom line.
The added impact of COVID-19 on employees’ financial well-being has been unprecedented. Most workers already are struggling to stay on top of their day-to-day finances in addition to keeping an eye toward retirement planning. With a global economy in deep recession, where are employees to turn in order to cover both traditional and unexpected expenses that continue to appear with each new wave of the pandemic?
Employers’ Responsibility
There are multiple HR distractions vying for employers’ attention right now. It can be tempting to think that now is not the time to complicate matters by adding new voluntary benefits for employees. But employers have a responsibility to not only chart the course for their organization’s recovery in this unprecedented time, but also to assist their employees in the recovery of their overall well-being –
physical, mental and financial.
Employees Need Solutions Now
Your clients’ employees need financial wellness assistance now more than ever. When workers are struggling to pay basic household expenses and manage creditors, it is tempting to choose short-term, high-interest financial options that appear to be helpful, but actually make matters worse.
Purchasing Power as a Solution
Launched in 2001 and now serving over 350 affiliated clients, Purchasing Power is an employee purchase program that allows workers to acquire consumer products and services through payroll deduction, particularly valuable when cash or affordable credit is in short supply. It is a voluntary benefit that gives employees a lifeline when they need it most. By adding Purchasing Power to their product portfolio, brokers can offer a winning solution to their clients while also providing a recurring revenue stream for themselves. Additionally, the Purchasing Power benefit program is offered at no cost, presents no liability and requires only a minimum administrative commitment from the employer.
Purchasing Power helps keep employees from borrowing from their 401(k), getting caught in a minimum payment trap or incurring long payment terms, high interest and penalty fees that accompany other financial “solutions.” It is a viable, cost-effective alternative to other consumer purchase plans, such as employer discounts, layaway, rent-to-own and even credit cards, as employees can make more informed decisions about their household purchases.
Through the program, workers can obtain consumer products and services through:
• disciplined purchasing with upfront pricing – the price you see is the price you pay
• a 6- or 12-month payment term
• pre-set spending limits and controls to prevent over-spending
There is no down payment or ballooning interest, no late fees and no additional fees beyond the all-inclusive price. Using this benefit, workers can purchase household items from recognized brands and manufacturers, including computers, software, home appliances, automobile tires, nursery and child-focused items, electronics, furniture and more.
The program is advantageous to the employee because it provides easy qualification –
employees simply must be 18 years old and meet minimum salary and tenure requirements. There is no further credit check involved. The process is reliable and pain-free. The tangible benefit is immediate as products are shipped upfront to the employee shortly after the order has been made.
Benefit to Brokers/Consultants
The Purchasing Power program is an ideal product for brokers/consultants to offer to new or existing accounts. It allows employers to meet their HR objectives with increased employee engagement and retention. Along with its unique selling proposition, Purchasing Power presents producers the opportunity to earn passive income with every employee purchase. Added to their portfolio, existing client relationships can be strengthened, while at the same time the prospecting tool can help lead to new accounts.
The Coronavirus pandemic is bringing into sharper focus the urgent need employees have to leverage resources to more successfully cover unexpected expenses. Purchasing Power as a voluntary benefit option is one important way to help meet employees’ financial needs, in addition to improving the employers’ bottom line.