Financial education is crucial to pensions crisis

Offering financial education in the workplace could have a significant impact on solving the pensions crisis – according to a study by Close Wealth Management.

The survey of more than 300 senior managers in companies with a turnover of more than £1m found that 53% of employers provided financial education schemes or services to their employees throughout their careers. Of these, 31% believe it has been directly responsible for increasing employee pension contributions.

The most popular form of financial education offered to staff was an introduction to pension schemes and contributions, offered by 37% of respondents. General financial advice was offered by only 18%, pension planning workshops by 17% and pre-and post-retirement planning by 16%. Advice on sharesave schemes proved the least popular, given by only 4% of respondents.

Almost half (47%) of respondents said they did not provide and financial education at all. But of these, 21% thought financial education would increase pension contributions, with 61% of them thinking it would increase contributions by up to 10%. And 12% believed it could boost contributions by 25%-50%. Three-quarters of all respondents said they believed the government should provide more incentives for companies to provide financial education.

Jamie Simmonds, chief executive officer at Close Wealth Management, said: “The pensions regime is changing, some of the final salary pension scheme rules are changing. it’s a natural evolution to say how can we help our employees. That’s why the number of firms providing financial education is increasing.”