How benefits technology can support the changing saving needs of employees

Need to know:

  • Digital technology is transforming the workplace savings field by giving employees better control of their finances, and access to the support they need to manage them more prudently.
  • When providing employees with financial education, little and often as opposed to information overload is the most effective way of helping them to gain knowledge and understanding over time.
  • Employees are more likely to be encouraged to save into a workplace scheme direct from their salary.

The pandemic has had a devastating impact on people’s financial security. While employees are often reluctant to ask their employer for help with managing their finances, with access to the latest technology, a growing number of employers are taking the lead on financial wellbeing.

In a survey of 10,000 employees for Lane Clarke & Peacock’s Employee Wellbeing report published in February this year, almost half (47%) said the pandemic had changed their ability to save. Of those, more than a third (38%) were saving less or not at all. Not surprisingly, 90% of employers now recognise the importance of having a financial wellbeing strategy in the workplace.

Workplace savings technology

The technology that facilitated the move to remote working during the crisis is also making it easier to provide support to employees via financial wellbeing tools, financial education seminars and digital platforms that enable employees to make savings directly from their pay into individual savings accounts (Isas) and general investment accounts, and to move money, subject to limits, between accounts.

Earlier this year, MetLife implemented Nudge for its own employees; the financial wellbeing platform combines financial education with personalised and timely prompts for individuals to help them maximise financial opportunities and make managing money stress free. Head of HR Amy Tomlinson says: “If [employees] feel in control of [their] money, [they] feel more in control of [their] life, but knowing how to go about improving [their] financial situation is often the hardest part. If it is ignored for too long, poor money management can take its toll on people’s mental health, causing unnecessary stress and anxiety.”

Punter Southall Aspire has rolled out an online education and engagement tool Aspire to Retire that works on the nudge theory of little and often, as managing director employee benefits consulting Alan Morahan explains. “It’s important not to bombard people with large wads of information that they will struggle to get through, and instead to help them to build their knowledge and understanding over a period of time,” he says.

Practical support

Employees also want practical help with improving their saving habits. Research from workplace pension and savings provider Cushon, published in August 2021, found that 52% employees would be more likely to save if their employer set it up for them, or if it came out of their salary directly, while 62% would stay in a workplace savings scheme if their employer automatically enrolled them in it.

Individuals can be deterred from establishing Isa accounts because of the perceived complexity that the process involves, so making these accounts available via their employer will alleviate this issue, says Craig Williams director, employee benefits at Broadstone. “Where the ability to save money through salary can really help is through people’s re-evaluation of their long-term savings aspirations and the possibility of reducing contributions to longer-term illiquid saving,” he explains. “Where possible, the redirection of pension contributions into an Isa allows an individual to retain access to the finances they require without materially impacting their longer-term savings aspirations.”

Share scheme saving

Some of the more traditional savings schemes, such as save as you earn (SAYE) and share incentive schemes, as well as benefits, designed to save money that would otherwise have been spent, for example, through retail discount portals, continue to offer employees additional opportunities to save.

Andreas Hunter, employee benefits consultant lead at Buck, says: “The best employers will think about what their employees want to achieve and take the time to understand their needs, which will be a spectrum of financial wellbeing goals, from building an emergency fund to preparing for a child’s university education. While mechanisms like payroll deductions help, simply providing access to products isn’t enough. Employers need to be more proactive.”