Partnership with student loan benefits start-up creates pathway for plan sponsors to use student loan debt as a catalyst to increase retirement savings
NEWARK, N.J., March 28, 2016 - Prudential Retirement has partnered with Student Loan Genius, becoming the first retirement plan recordkeeper to offer the start-up’s new 401(k) contribution feature, the company announced today. The innovative feature enables companies to reward employees for making student loan payments by providing a pre-tax contribution into their retirement accounts. Prudential Retirement is a business unit of Prudential Financial, Inc. (NYSE:PRU).
According to American Student Assistance, federal student loan debt hovers over $1.2 trillion, while private student loan debt stands at $150 billion. For many U.S. workers, student debt—for themselves, for a spouse, significant other or a child—has increasingly become a major roadblock to saving for their future.
“As student loan debt grows, workers are having to choose between paying off their student loans or prioritizing other important financial goals,” said Jamie McInnes, senior vice president and head of Total Retirement Solutions for Prudential Retirement. “For example, our research tells us many workers will choose to pay down debt rather than save for retirement. As an industry, we need to understand this and provide solutions to help maximize retirement security for American workers.”
The new partnership with Student Loan Genius will enable Prudential Retirement to offer an innovative benefit to clients that gives their employees an opportunity to build retirement savings while paying down student debt. Employers who offer this retirement savings vehicle gain a competitive advantage, as it enables them to attract and retain top talent.
The benefit works this way: If an employer elects to add this feature to their plan, employees who make student loan payments processed through Student Loan Genius receive a pre-tax contribution to their retirement account from their employer based on that student loan payment, whether or not they contribute to their 401(k) plan or receive any matching contributions. The contribution, paid as a flat dollar amount, or a percentage of the student loan payment or of the employee’s compensation, can be offered annually, monthly or for each payroll period. For example, an employer could offer a $75 monthly contribution to an employee who pays a $400 loan repayment each month.
“We’re excited to team up with Prudential Retirement to offer our 401(k) contribution feature and platform to their clients,” said Tony Aguilar, CEO of Student Loan Genius. “As a retirement provider that works with thousands of organizations to help their employees retire confidently, Prudential has deep expertise working with employers and participants and can offer insights that help us better understand workers’ savings behavior and the challenges they face in saving for retirement.”
In February, Gibraltar Ventures, an affiliate of Prudential Financial, participated in the seed funding round for Student Loan Genius.
Prudential Retirement delivers retirement plan solutions for public, private, and nonprofit organizations. Services include defined contribution, defined benefit and non-qualified deferred compensation recordkeeping, administrative services, investment management, comprehensive employee education and communications, and trustee services, as well as a variety of products and strategies, including institutional investment and income products, pension risk transfer solutions and structured settlement services.
With more than 85 years of retirement experience, Prudential Retirement helps meet the needs of 4 million participants and annuitants. Prudential Retirement has $368.9 billion in retirement account values as of December 31, 2015.
Retirement products and services are provided by Prudential Retirement Insurance and Annuity Company (PRIAC), Hartford, CT, or its affiliates. PRIAC is a Prudential Financial company.
Prudential Financial, Inc. (NYSE: PRU), a financial services leader, has operations in the United States, Asia, Europe and Latin America. Prudential’s diverse and talented employees are committed to helping individual and institutional customers grow and protect their wealth through a variety of products and services, including life insurance, annuities, retirement-related services, mutual funds and investment management. In the U.S., Prudential’s iconic Rock symbol has stood for strength, stability, expertise and innovation for more than a century. For more information, please visit http://www.news.prudential.com/