Editorial: Employers, workers can be financially fit

Some of Minnesota's most influential companies are leading an important campaign to shore up the personal finances of the state's workforce.

The Itasca Project's new Financially Fit Minnesota program is designed to increase retirement savings and encourage the use of direct deposit instead of paychecks. Despite dire warnings of a looming retirement crisis, fewer than half of Minnesota workers currently participate in employer-sponsored retirement savings plans. In addition, more than 500,000 full-time workers in the Twin Cities don't use basic banking services such as direct deposit, and a growing number are using costly money exchanges and payday lenders.

With that troubling backdrop, the Itasca Project today will call on employers throughout the state to join the effort to close the gaps in savings and encourage the use of direct deposit. Itasca is an alliance of more than 40 Minnesota chief executives and elected leaders formed to address regional issues that affect economic competitiveness and quality of life.

Financially Fit Minnesota can have an important and measurable impact on the state. Already companies such as Best Buy, Allina Hospitals & Clinics and Target have made specific commitments. For example, Best Buy will automatically enroll all new and current Minnesota employees in its 401(k) plan. Allina intends to maintain a 90 percent or higher participation rate and boost savings rates. And Target will emphasize the benefits of direct deposit, which helps workers avoid check-cashing fees while establishing a relationship with a traditional bank.

Best Buy's move toward automatic enrollment in its 401(k) plan sets a great example for other Minnesota companies, regardless of size or industry group. Many employers now rely on workers to opt in to retirement plans, but it makes sense that participation would increase if employees were automatically enrolled and had to take steps to opt out.

One of the keys to increased participation is employee education, and many companies with higher rates of 401(k) enrollment provide seminars and other employee services aimed at making the plans easier to understand and use with confidence. For smaller, resource-stretched companies, the Financially Fit Minnesota website provides an excellent toolkit.

Our workforce is aging, and study after study shows that too few workers are saving enough for retirement and too many are using costly alternatives for basic banking. Itasca's help will make it easier for Minnesota companies and their employees to start reversing those trends.