Financial services giant Transamerica has launched an emergency savings account designed to help workers save for unexpected events.
The benefit was created for employers to help their employees prepare for unforeseen circumstances that could affect their ability to contribute or preserve their retirement savings.
Kent Callahan, CEO of Workplace Solutions at Transamerica, said: “We believe that people will be more willing to save for the long term in retirement plans if they already have a cushion to meet household needs and emergencies first.
“Emergency savings accounts offered in the workplace are perfectly positioned to help people cope with unexpected life events and reduce financial stress.”
A Federal Reserve report released last year found that less than two-thirds (64%) of adults would be able to cover an unexpected expense of $400 using only cash, savings or a credit card that they could refund on the next statement.
An additional 12% of American adults said they would be unable to afford the unexpected $400 expense by any means.
Emergency savings accounts are FDIC insured and will facilitate the automatic sending of a portion of each worker’s paycheck to an emergency savings pot.
Transamerica has partnered with custodial specialist Millennium Trust Company and SecureSave, which specializes in emergency savings products.
Employers will have the ability to contribute to employee accounts to incentivize workers to engage.
The UK has set up a similar project with a small number of employers, facilitated by NEST Insight, the research arm of pension provider NEST. In recent years, he has partnered with employers to test what is called “sidecar” savings jars, designed to provide workers with emergency savings.
The Office of the Comptroller of the Currency has previously recognized the importance of improving financial resilience, particularly as it relates to home ownership. At a recent industry event, Acting Comptroller Michael Hsu said the regulator was “working to reduce barriers to homeownership and promote financial inclusion”.