Transamerica Launches Emergency Savings Account

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 may affect their ability to contribute to 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 first meet household and emergency needs.

“Emergency savings accounts offered through the workplace are perfectly positioned to help people address life’s unexpected events and reduce their financial stress.”

A report from the Federal Reserve, published last year, found that less than two-thirds (64%) of adults would be able to cover an unexpected $400 expense by exclusively using cash or savings or a credit card that they could pay off at the following statement.

An additional 12% of US adults stated they would be unable to pay the unexpected $400 expense by any means.

The emergency savings accounts are FDIC insured and will facilitate a portion of each worker’s paycheck to be automatically sent to an emergency savings pot.

Transamerica has partnered with custody specialist Millennium Trust Company and SecureSave, which is dedicated to emergency savings products.

Employers will have the option to contribute to employees’ accounts to incentivise workers to engage with it.

The UK has a similar project in place with a small number of employers, facilitated by NEST Insight, the research arm of pension provider NEST. Over the past few years, it has teamed up with employers to trial so-called “sidecar” savings pots, 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 in regard to homeownership. At a recent industry event, acting comptroller Michael Hsu said the regulator was “working to reduce barriers to homeownership and promote financial inclusion”.