Financial education in the workplace

Over the last few years the topic of workplace financial education has finally (and rightly) come to the fore in the world of employee benefit provision.

One of the principle tenets of this approach is ensuring that your employees are aware of, and utilise where appropriate, all of the tools that may help them manage their personal finances in a smarter way. The return for the employer is a workforce with less financial worries, which evidence suggests will result in less sickness absence and greater engagement with work activities. So a win-win for both employer and employee.

With this in mind it is important that employers stay aware of – and communicate to their workforces where appropriate – changes that could benefit the financial wellbeing of their employees. And there are two recent separate news items that are relevant here.

The more eye-catching of the news stories was the Conservative announcement to launch a Help to Save scheme. This plan is designed to help low paid working families save with the support of government money, with the hope that such an approach will allow such families to absorb financial shocks better. This in turn will hopefully reduce the need to use payday loans as short-term solutions to money issues. We are sure we will see much more on this topic in the Budget itself, but for the meantime here is a link to the announcement.

The other item is no less important – but did not capture many headlines. HM Treasury recently published the Financial Advice Market Review. This is driven by the need to ensure that all individuals within UK society can access financial advice and/or financial guidance. The problem here is that successive waves of legislation has pushed the cost of advice up, leaving many low income families unable to afford advice. This could result in many families making poor and ill-informed financial decisions.

So what to do about this? The report recognises that this is a major issue, but importantly does not focus only on the advice and financial services industry. A couple of quotes that may be important to employers below:

“It is also clear to us that unless we are able, as a society, to increase consumer engagement with financial services, we will not achieve a long-term, sustainable solution to the issues the Review has identified.”

“Consistent with our belief that this issue can only be tackled through a multi-faceted approach, we also make recommendations directed towards employers.”

The report includes a host of recommendations, most of which are aimed at financial services providers. Yet there are four recommendations under “Accessibility” which may prove to be relevant to employers:

Recommendation 11: The Financial Conduct Authority (FCA) and The Pensions Regulator (TPR) should develop and promote a new factsheet to set out what help employers and trustees can provide on financial matters without being subject to regulation.

Recommendation 12: The Financial Advice Working Group should work with employers to develop and promote a guide to the top ten ways to support employees’ financial health.

Recommendation 13: HM Treasury should explore ways to improve the existing £150 income tax and National Insurance exemption for employer-arranged advice on pensions.

Recommendation 14: HM Treasury should explore options to allow consumers to access a small part of their pension pot before the normal minimum pension age, to redeem against the cost of pre-retirement advice.

Although it is early days for many of these recommendations, the important point here is that the role the employer and workplace can play in Financial Education is clearly recognised and welcomed by both Westminster and Whitehall. So we would hope that many more employers would now feel encouraged to start offering such services to support their employees. For more information on the above please speak to your usual Jelf consultant.

We will of course keep you updated on both the above topics as they develop.

For the full original article and other similar posts, please visit the Jelf Group blog.