As more employers implement diversity, equity, and inclusion (DEI) strategies into their workplace plans, new research from Voya highlights how such features can drive greater inclusivity and engagement.
Representing over 163,000 employees among Black, Latino, Asian and white populations, the research examined retirement plan participant data from six plan sponsor clients across industries ranging from retail, financial services, government, consumer goods and utilities.
Conducted in 2022, Voya surveyed employees on their financial confidence, and how certain crises have influenced different groups. For example, the research surveyed individuals on the impact of COVID-19 in 2020, finding that Black and Latino employees were likelier to now experience lower levels of financial confidence because of the pandemic, at 37% and 43%, respectively, compared to 56% of Asian households and 59% of white households.
Savings differences among employee populations
The drop in financial confidence likely translated to retirement plan participation, savings rates, and average account balances. Black and Latino workers were more prone to exhibit smaller participation levels in their workplace retirement plans, with over half (53%) of Black employees and 45% of Latino workers participating in a retirement plan compared to 62% of Asian employees and 45% of white employees.
Similarly, Latino workers had the lowest average savings rate of 6.9%, compared to 7.1% of Black participants, 8.4% of Asian employees, and 9.5% of white employees. According to Voya, Asian participants had the highest average account balances of $99,000, relative to $86,000 for white employees, $45,000 for Black workers and $43,000 for Latino participants.
Automatic features drive engagement across all groups
Voya’s research studied savings attitudes among employees whose plan offers automatic features compared to those who don’t. In its analysis, Voya found that while Black and Latino employees have lower plan participation rates, the gap closes significantly in plans that offer automatic enrollment. In these plans, Black and Latino employees have a two to three times higher participation rate compared to their peers at employers who do not offer automatic enrollment.
The research found that employer plans who do not automatically enroll employees into their workplace retirement plan have active participation rates of 49% (white employees), 46% (Asian employees), 34% (Latino employees) and 31% (Black employees). In comparison, those plans that do automatically enroll employees showed far greater active participation rates of 92% (Asian employees), 90% (white employees), 88% (Latino employees) and 87% (Black employees).
Offering personalized solutions to underserved communities
While education campaigns, emergency savings vehicles, and student loan debt support all make a great difference in the financial confidence and overall wellness of employees, Voya data showed more participants are seeking out financial guidance programs. Seventy-eight percent of Black participants said they are interested in financial guidance resources, compared to 81% of Latino participants and 74% of white participants. Additionally, 69% of all employed Americans surveyed showed interest in access to a professional advisor.
A need for personalized financial guidance also extends to other disenfranchised groups such as the special needs communities, who continues to face challenges in income gaps, career interruptions due to caregiving responsibilities, added health considerations, and more, said Voya in its report. According to the research, one in four adults—or 61 million people—are living with a special need or disability, and one in five (21%) are caregivers.
People with disabilities and caregivers may delay saving for retirement due to day-to-day responsibilities and overwhelming expenses, therefore offering personalized guidance to fit their needs—along with ensuring these participants are enrolled in a retirement plan—can significantly improve retirement plan confidence and preparedness.
“Given the additional expenses related to living with a disability and the cost of caregiving, this community could benefit from additional resources — especially when it comes to long-term financial planning,” stated the report.
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