Five top tips to help engage employees with financial wellbeing

A recent survey [1] conducted by Cushon has revealed that UK adults are less concerned about saving for retirement than they were a year ago.

Concerns about saving for retirement have reduced by 20% overall when compared to last year [2]. 73% of individuals across all age groups agree that the Covid-19 crisis has made them realise that whilst pensions are important, having savings they can access if needed is equally important.

Although concerns about retirement are down, many people remain concerned about other finances, which is not surprising given the current pandemic. 16% of people worry about how to manage credit and debit card debt and 24% are concerned about how to save consistently. What people worry about is age related with 22.5% of under 35-year olds wondering how they will afford to buy a new home. Just 7% had no financial concerns at all.

The same research also found that 87% of employers say worries about finances have a negative effect on an employee’s performance at work, so it makes sense that healthy savings habits should be fostered through the workplace.

The reality is that while most employees now have a pension, not everyone, particularly younger employees, want to engage with them as there are other more pressing financial circumstances to deal with before they reach retirement. In fact, for under 35 olds, their biggest concern is how to get on the housing ladder. For many employers, pension contributions represent the second biggest people-related cost; second only to direct payroll costs. But for a lot of younger employees, they are not the most valued benefit and engagement rates are low.

As financial resilience climbs higher up the corporate agenda, we highlight the top five things that companies can do beyond pensions to support their employee’s financial wellbeing and help them manage their money effectively:

1. Education – 55% of employees would like more support from their employers including webinars. Financial education can help employees understand more about saving versus spending and the various investment options available to them. Providing one to one sessions, workshops or webinars with an independent external advisor can really engage employees and help them understand what the options are when it comes to their finances, depending on where they want to be in the future.

Education isn’t the same as advice, but providing information and options enables employees to make informed decisions.

2. Clarity around products – Once employees have a better understanding of their financial situation they need to work out which route or product is best for their needs depending on their attitude to risk, entitlement for government support as well as any tax relief and salary sacrifice options.

With so many different savings and investment products to choose from, employers should support their workforce with clear and transparent information about the comprehensive range of options available including financial forecasting.

3. Workplace savings scheme – Offering a workplace savings scheme is a robust way of supporting employees’ financial priorities and making the scheme accessible to everyone, no matter their age, earnings and circumstance.

Much like a pension, an amount is deducted directly from payroll each month and put into a savings pot of the employee’s choice. With deductions from as little as £10 per month, workplace savings offer individuals the opportunity to put money aside for whatever it is they’re saving for – a new home, family or unexpected events, as we’ve recently experienced.

4. Pension redirect - Retirement is a long way off for some individuals and between now and then there are a lot of expensive life events to deal with first; marriage, first home, kids, travelling, etc. All of which are going to seem a lot more important than an event that’s possibly 30-plus years away.

To combat this, many employers allow some of their pensions contributions to be redirected into a separate more accessible savings pot to cover more immediate and medium-term financial priorities. Employers and employees still contribute the minimum auto enrolment levels to the pension scheme, and employees have the opportunity to top up accessible savings contributions just as they would a pension. 41% of employees would like to see their employers implement a pension redirect arrangement, increasing to 49% for under 35 year olds. This results in more engagement for pensions and overall savings.

5. Visibility of all savings in one place – In the digital age we are in, employees want easy to use platforms to manage all their savings in one place. A workplace savings scheme helps make this a reality with pensions, short and long term savings being managed via the workplace. This doesn’t mean that employers are responsible for their employees’ personal finances, just that they are enabling and encouraging better savings habits. Not only does this significantly help engagement rates but it also gives the employee a feeling of control over their money and allows them to monitor progress.

[1] Cushon's Financial Resilience research conducted amongst 2,000 individuals and 1,000 HR Managers - May 2020

[2] Cushon's Workplace Savings research conducted amongst 1,248 individuals and 508 HR professionals – April 2019