More than a quarter (28%) of employer respondents provide a financial education programme to ensure employees understand and make the most of their workplace benefits, according to research by Close Brothers and the Pension and Lifetime Savings Association (PLSA).
Its Lifetime savings challenge report, which surveyed 1,000 employers with 200 or employees and 2,009 employees from organisations with 200 or more staff, also found that 30% of employer respondents who already offer financial education do so as a way of reducing employee financial stress. This compares to 30% who provide financial education to improve employee financial wellbeing, and 29% who view it as a valued employee benefit.
The research also found:
- 20% of employer respondents aim to launch financial education initiatives for staff in the next 12 months, and 27% plan to implement financial education for employees in the next three years.
- 60% of employer respondents believe some of their employees do not have sufficient long-term savings, including pensions. Reasons for this include employees finding saving unaffordable (29%), having too much debt (21%), employees finding the savings landscape too complicated (20%), or not understanding the savings choices that are available (15%).
- 50% of employer respondents do not currently offer financial education.
- 46% of employer respondents who provide financial education for their staff tailor it by either career stage or age, and 44% shape financial education according to salary.
- 55% of employer respondents who offer employee financial education deliver it using face-to-face sessions, 49% use individual face-to-face meetings, and 21% give access to advice over the phone.
- 62% of employer respondents who provide financial education feel that face-to-face advice is the most effective way to increase the understanding of personal saving and engagement among employees. This compares to 9% who view web based services, such as webinars, online education and a staff intranet, as the most effective delivery method for financial education.
- 50% of employer respondents who do not plan to implement financial education state that it is not a priority, 35% do not have a budget for it, and 20% feel financial education would be too expensive to provide.
Jeanette Makings (pictured), 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 [organisation] 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 defined contribution, lifetime savings and research at the PLSA, added: “When [considering] 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.”
