The Consumer Financial Protection Bureau on Friday announced an autosave program template that would allow employers to help new and existing employees build an emergency fund by allocating a portion of their income toward an existing account at a bank of their choosing.
Without a stated preference by the employee, the employer would create an account at a financial institution of its own designation.
According to the CFPB, an autosave program would function similarly to an automatic 401(k) account and workers could opt not to participate.
The agency has created a template that employers are able to use as the basis for an autosave program, which would need to be approved by the CFPB.
While the coronavirus crisis has resulted in job losses and reduced employment income among many American households, many people had little to no emergency savings prior to the pandemic.
A 2019 survey conducted by the Federal Reserve found that 37 percent of people would have a difficult time covering an unexpected $400 expense – including 12 percent who said they would not be able to meet the cost by any means.
Nearly 30 percent of people said they were either unable to pay their monthly bills or were a small setback away from being unable to do so.
Americans are having similar issues saving for retirement, which has become more troublesome during the pandemic.
More than one in three people were thinking about or had already decreased retirement savings contributions, according to data from TD Ameritrade. And others are putting retirement plans on hold. Forty-four percent of people said they would delay retirement as a means to cut costs, while 51 percent were open to picking up a job.
Meanwhile, many households are dealing with joblessness that has resulted from the coronavirus outbreak. More than 51 million people have filed new unemployment claims since mid-March.