Why improving employees’ financial wellbeing could be easier than you think
Pardon the Interruption
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The focus in employee benefits is shifting away from pensions and insurance towards something broader but also more vague. How can employers begin to help their staff with their ‘financial wellbeing’?
Larger firms have traditionally helped to prepare employees and their dependants for the financial impact of retirement, death and long-term sickness, but these ideas are apparently no longer sufficiently attractive for workers – and perhaps no longer what they most need.
The idea of financial wellbeing or financial wellness has made its way across the pond from the US. At its core is the notion that while pensions, health insurance and the like are all good and well, employees’ most pressing financial concerns might be much more immediate – and distract them from their day job or stop them from getting enough sleep. Such worries are generally debt-related, but can also include the day-to-day struggle of making ends meet for people on low incomes.
How do UK employees score on financial wellbeing?
A study by the Centre for Economics and Business Research found 30% of those surveyed are just getting by financially, and more than a third said they would not be able to absorb a major unexpected financial expense. The hospitality and leisure and the construction sectors suffer the highest financial impact from a lack of financial wellbeing among employees.
The main question to ask employees therefore, according to new tools and guidance by provider Aegon is, do they have money left over at the end of the month? In other words, would they be able to pay an unexpected bill for the dentist or replacing a broken fridge?
Aegon points out that most employers fail to point staff towards the whole range of benefits they have access to. Many might thus not be aware of savings vehicles, safety nets, discounts or helplines that might benefit them. Explaining the existingbenefits to staff and regularly reminding them of this, for example via posters, intranet or tailored sessions, should therefore be an important step, according to Aegon.
But how do pensions fit into this?
Pensions still seem to be one of the most important parts of supporting employees. Contributing more than the legal minimum was the most widely adopted initiative by employers to boost employees’ financial wellbeing.
Employees responding to the survey said pension contributions are also the most effective way to improve their financial wellbeing; 82% said it would either be very useful or fairly useful.
However, employers are warned to be mindful of jargon, which is a barrier to pension saving according to Aegon, so available contributions need to be accompanied by easy to understand information.
How can employers improve employees’ financial wellbeing – and what role do pensions play in this?