Three in five (60 per cent) believe some of their employees don’t have sufficient long-term savings
One in four (27 per cent) employers are looking to launch financial education initiatives for staff in the next three years as they look to help employees tackle the lifetime savings challenge, according to new research from Close Brothers in partnership with the Pension and Lifetime Savings Association (PLSA). While 50 per cent of employers don’t currently offer financial education, one in five (20 per cent) said they plan to so in the next twelve months.
The Lifetime Savings Challenge report, which seeks to understand how employees are saving, where they need help, and the level of support available, found that three in five (60 per cent) employers agree that some of their staff don’t have sufficient savings, including pensions. This is not only due to them finding saving unaffordable (29 per cent) or them having too much debt (21 per cent), but also finding the savings landscape too complicated (20 per cent) and not understanding the savings choices available (15 per cent).
Of the employers that are already providing financial education, 30 per cent do so as a way of reducing employee financial stress, 30 per cent do so to improve employee financial wellbeing, 29 per cent believe it is a valued employee benefit, and 28 per cent do so to ensure employees understand and make the most of their workplace benefits.
More than half (55 per cent) of employers who offer financial education do so via group face-to-face sessions, with 49 per cent offering individual face-to-face meetings and 21 per cent offering access to advice over the phone. According to those who provide financial education, face-to face advice (62 per cent) is the most effective way to increase the understanding of personal saving and engagement amongst employees. Interestingly, despite the rise of technology solutions being offered, web based services such as webinars and online education/intranet were only rated as the most effective delivery method by 9 per cent of employers.
Only around half (46 per cent) of those employers that offer financial education tailor the programmes by either career stage or age, with 44 per cent shaping it according to salary level.
Of those employers who have no plans to provide financial education, half (50 per cent) said it is not a priority, 35 per cent say that there is no budget for it, and one fifth (20 per cent) believed that financial education would be too expensive to provide.
Jeanette Makings, Head of Financial Education at Close Brothers said:
“Employers have a key role to play in helping their workforce to become more confident when it comes to meeting the lifetime savings challenge. Those that have embraced it are already seeing a real impact. Of those employees that have received financial education, over a third said that it had been useful in guiding their immediate, medium, and long-term saving decisions. This means a happier, more secure and more productive workforce. It’s a win-win for both employers and employees.
“But crucial to the effectiveness of a financial education programme is how and to whom it is delivered. While employers may find online provisions easier and cheaper to implement, its lack of effectiveness means that both the company and employees are being short-changed. For financial wellbeing to improve, employees must use the programme and be confident in applying that knowledge to make a positive change to their finances. Online is not delivering these results and so is a false economy. Employers need to utilise the impact of face to face delivery and provide a programme that is tailored to its people in terms of need and interest as well as career stage and age. For employers to add real value, they must engage with employees on the topics that matter most to them throughout their lifetime savings journey, delivered in the most effective way.”
Nigel Peaple, Deputy Director of DC, Lifetime Savings and Research at the PLSA said:
“When you consider salaries, pension contributions and other benefits, UK employers make a significant contribution to their employees’ financial wellbeing. Financial literacy has long been an issue that the UK has struggled with so it is good news that an increasing number of employers are realising the important role they can play in helping employees tackle the lifetime savings challenge.
“Looking to the future, providers, schemes and government also have a role to play in helping people to make the most of their finances. The PLSA is currently consulting on the creation of a set of retirement income targets which will provide savers with tangible goals to take into account as they plan their finances.”
If you’re interested in ways of improving employee engagement, take a look at the agenda for our leading employee engagement and rewards summit taking place on the 27 March.