Webinar Recap: The Advantages of Employee Purchase Programs and Budgeting Empowerment

This episode centers around the value of employee purchase programs and budgeting empowerment. Our esteemed career partners in Purchasing Power, a voluntary financial wellness benefit that for over 20 years has helped employees stretch their budget when facing large unexpected expenses, ultimately powering individuals to a better quality of life.

Tim Kastrinelis, the Vice President of National Sales and Partnerships, takes us through everything about the Purchasing Power program by answering a series of questions.

What Are the Financial Challenges for Employees in Today’s Economic Environment?

Purchasing Power has been around for more than two decades, and the need for the program is even greater. Data from independent surveys and studies show that at least two-thirds of working Americans indicate that they’re living paycheck to paycheck. The latest studies and federal reserves indicate that 37% of working Americans will have difficulties handling an unexpected expense that requires them to spend at least $400. This figure has risen from 32% just a year ago.

From these figures, it’s obvious that the need for a financial empowerment program that bridges the gap between household income and the cost of living is significant. So, there’s a great opportunity for employers to have a positive impact through an employee benefit program like Purchasing Power.

How Challenges Impact Employers and Severity of Impact When Employees Face These Types of Financial Challenges

The impact is significant. COVID-19 put a magnifying glass on the impact that financial stress has not just on employees but also on the employees in the workplace. Financial stress distracts from the focus at work and, therefore, has a significant impact on productivity. It also means that employees who are financially stressed have low satisfaction.

So, with a financial empowerment solution, letting employees know that we care about their financial health is a wonderful way to say we care and have a solution. And because you work for our organization, you can access these special services and products.

How Does Purchasing Power Solve This Challenge and Bridge the Gap Between the Cost of Living and Household Income for Low and Mid-Wage Employees and Deliver Financial Empowerment?

That’s the key to our program. We deliver on that or address the challenges in three ways:

1. Employee Purchase Program

This is the most important program, which is bridging the gap between household income and the cost of living. It does so by providing access to a special purchasing program that allows employees to pay over time when making purchases. This is important when an employee is faced with large consumer expenses such as repairing the refrigerator, a computer, a washing machine, or even new tires for the car. 

So, this is our number one component: a purchase program that provides financial flexibility and an immediate solution for consumer employee needs.

2. Financial Health Resources

This program provides access to local resources that are fully vetted, non-profit, and designed specifically to address financial stress by giving them access to things like cost savings on heating and utilities and food savings. In the last year, these have been the most utilized referral resources, food savings, heating, and utility costs.

3. Live Counseling and Financial Coaching

The financial coaching is designed to help employees build an action plan to improve their credit score and improve how they can get financing. 

So, our program is composed of three key solutions that address the immediate need. For example, when having to replace something like a refrigerator, washing machine, computer, or four tires of a car. That type of thing with special financial flexibility, no interest, no credit check, and being able to pay over 12 months.

But how can we help that employee reduce the things that are putting them in financially stressful situations? That’s where access to financial assistance resources comes into play. And then the ability to get live one-on-one financial coaching to help build a stronger, more solid financial foundation for the employee and their family at no cost.

What Sort of Guardrails Should You Put in Place to Ensure the Employees Aren’t Put Into Worse Financial Situations?

When employers learn about the purchase component of our program and understand the value of being able to pay overtime through payroll deductions, the next question they ask is, “Will it encourage my employees to spend beyond their means?”

Not really, because for each individual employee, we establish a spending limit. We base the spending limit on our tenure with the company. How long have they worked with the company, and how much do they make?

We set those spending limits at a conservative limit, which is an average of 7% of their annual projected income. We’ve also found that employees, on average, spend about 35% of that spending limit. So you have a conservative spending limit, and actual utilization demonstrates that employees will use it in a conservative manner and not spend beyond their means.

What Sort of Results Have Employees Seen From Enrolling in Any of the Components of This Program?

We always survey our customers when they use these programs. The surveys consistently tell us that 97% of employees see value in the program. 81% believe that the program does reduce financial stress.

A new question that we ask is, “Are you less likely to withdraw or borrow from your retirement savings? 75% of employees indicate that they’re less likely to borrow from their retirement savings. 61% of employees say that with Purchasing Power, they’re more likely to stay with their employer.

What’s The Impact Been on the Employers That See Good Engagement with Purchasing Power?

From our studies of our book of business and looking across our biggest clients, we see that those who utilize the program are less likely to leave their employer. 

The program reduces employee turnover. Employees who do not use the program turnover at a rate of 29%. Employees who do use the program turnover at a significantly lower rate of about 16%.

The program is not just about improving employee satisfaction and reducing employee stress. It’s also a great tool employers can use to increase employee retention, productivity, and focus.

What Does Launching Purchasing Power Look Like for the Employee?

One benefit of this program is the ease with which it can be launched. There’s no cost for the purchase of the program, no cost for access to the financial program, no cost to utilize the one-on-one financial coaching, and no enrollment requirement. Setting up the program takes three simple steps:

Step 1: We need an eligibility program to get started

We can build off an existing eligibility file because we need minimal data elements.

Step 2: We send you a deduction file

We need to set up an electronic interface that allows us to communicate the deductions for the purchases made by the employees.

Step 3: We require a remittance or payroll reconciliation file

We need to have the electronic interface returned to us that demonstrates how much has been deducted along with the payment for those purchases based on payroll deductions authorized by the employee throughout the year.

What Does Partnering with Benefit Technology such as Corestream Do for the Overall Employee Experience and the Impact on the Employer and Shared Customers?

Over the years, we’ve found that working with Corestream, the integration between the setup of the files and the overall communication strategy works well together. The wiring and piping already exist with Corestream as a partner. This results in a much shorter setup time for the three files. Corestream takes responsibility for the biggest part of the setup.

We then think about the communication of the program for the biggest impact. Positive communication with the employees, communication packaging, and mailers to the home in conjunction with Corestream's overall communication strategy makes for a great, comprehensive voluntary benefit portfolio of services and products.

Working together, there’s an opportunity to leverage the impact of our program as part of an overall voluntary benefits solution with Corestream as a partner.

Corestream is a voluntary benefits platform that empowers benefits teams to scale their VB offerings. It offers purchasing power, pet insurance, group auto and home, life with long-term care, legal plans, and ID theft without worrying about the administrative burden and the noise that comes along with some of these niche benefit offerings.

And then a consolidated, guided, and educational enrolment experience, putting the right benefit in front of the right employee at the right time based on their lifestyle and actions. And guiding them away from products that wouldn’t be the best fit for them.

Are There Any Particular Industries in Which You Found a Good Fit For the Purchasing Power Program?

The most important thing to keep in mind about our program and its fit with an employer is that it’s really tied to the demographic profile of the employer before the industry. If the demographic profile represents the employee who finds themselves financially stressed from time to time throughout the year, that would basically be employees earning in the range of $20,000 to $80,000 per year. That type of demographic profile finds the program really attractive. Utilization of our program during the year is highest in those salary bands. So, it’s a great solution for the lower and middle middle-wage.

And in the last few years, we’ve actually seen that $80,000 figure crip up to more like $100,000 in today’s environment of record-high inflation, as well as increased interest rates, which are going to continue in the next few years. So, it’s a good fit for a variety of income levels, not just middle-wage.

Is The Program Only Available To Full-Time Benefit-Eligible Employees?

No. Another benefit of our program is that as long as you’re earning at least a projected $20,000 a year and have been with their organization for 12 months or more, you’re eligible for the program. This is a great way to extend benefits to part-time employees or employees who might not be eligible for traditional employee benefits.

It’s a great way for employers to show employees that they care about their financial health and not just their physical and mental health. It’s a way to drive employee retention and increase workplace productivity and employee satisfaction. And as we always say, employees are your number one asset.

Book a Consultation to learn how Corestream or Purchasing Power can help!