But there is much discussion in the industry about whether this responsibility will fall to employers, financial education and pension providers, or the government.
Tim Perkins, a director at financial education provider Nudge Global, said: “The £20 million the government has pledged for financial education won’t even touch the sides, so, looking to auto-enrolment as a precedent, we expect employers to pick up the logistical responsibility and cost.
“The Budget only focused on at-retirement education, which our research and employer clients tell us is decades too late, so it is anticipated that most employers will include financial education in their benefits package throughout the employee lifecycle.”
Nudge’s Employee financial education study 2014, published in April, found that 77% of respondents believe financial education in the workplace is helping employees to achieve better financial outcomes.
“Financial education is more than just another employee benefit,” said Perkins. “It is not only the right thing to do, it is also contributing significantly to the employer’s bottom line.”
Financial education also plays a key role in ensuring staff are aware of their options at retirement.
But Wealth at Work’s Generating income in retirement 2013 research, published in March, found that 65% of employers believe their staff do not understand what to expect from their pension scheme at retirement.
Fortunately, 83% of respondents consider professional retirement planning education a critical need for their employees.
A new national professional body, the Life Planning Association, was launched in March to tackle the challenges of an ageing population and changes to pension schemes. Its director and secretary, Wladek Koch, said: “Our objectives are to provide information and advice on ways to implement life planning education; encourage, support and undertake research in life planning and related fields; and deliver a range of services and qualifications to life planning practitioners.”
Koch said employers offer the most effective route to educating UK workers about their savings and retirement options.
“Good practice and the increasing presence of flexible and voluntary benefits in the workplace point to a better, as well as more rounded, approach than just promotion of a particular offering,” he said.
“There are many other interventions designed to look after the welfare of employees, such as employee assistance programmes, and so life planning and financial education are just additional tools in the kit bag that employers can deploy.”
Key statistics
- 77% believe financial education in the workplace is helping employees to achieve better financial outcomes.
- 55% of financial education programmes cover only employee benefits and do not offer wider support.
- 76% of respondents that have implemented financial education in the workplace are unsure of the actual cost.
Source: Employee financial education study, published by Nudge in April 2014.
- 83% of respondents consider professional retirement planning education a critical need for their employees.
- 14% of respondents are aware of the various retirement income options.
Source: Generating income in retirement, published by Wealth at Work in March 2014.
View from the US
Asset management firm BlackRock has rebranded and relaunched its financial education programme for 5,500 UK staff.
Speaking at Employee Benefits Connect in New York in March, Katie Nedl, global head of benefits at BlackRock, said: “Globally, retirement benefits are a theme that employees rely on their employers to provide.
“We are entering into a new world of responsibility, which is making sure we are providing the right tools and resources to enable, engage and educate employees to achieve their own financial wellness.”
BlackRock decided to rebrand its financial education programme for staff while rebranding the financial products it offered customers.
Nedl said: “There was a rebrand on the customer-facing side at this time… simply, what do I do with my money? Our employees are asking this exact same thing. We are going out to our clients, saying ’this is a simple question, come to BlackRock and we will answer it for you’, but I’m thinking, how am I answering that for our own employees? Financial wellness isn’t about doing something different. It’s about repackaging existing plans and talking to employees in a way they understand.”
BlackRock categorised financial wellness into three categories: retirement, which includes its pension plan; personal investment, which includes its own products, such as employee stock options and college savings plans; and financial protection, which includes group risk benefits such as life insurance.
The organisation also rebranded its resources and communications, including the addition of an internal financial wellness social media space, a joined-up page on its HR portal and a once-a-month learning series available to all staff.
“All of this has to fit into a picture of what makes you financially well,” said Nedl.
