Can a financial wellbeing strategy be truly global?
Every country has its own challenges when it comes to understanding money. Right across the world research indicates that employees feel vulnerable about their money and yearn for more security. A Willis Towers Watson study – Global Financial Wellness (2017) – found that globally only 51% of employees are satisfied with their financial situation. This figure is even lower in countries such as the USA (48%), Argentina (44%), Turkey (42%) and Japan (33%). Globally, 38% of employees say they often worry about their current financial state, while 21% say their financial problems are negatively affecting their life.
Worryingly, despite this prevalence across the globe, Aon’s Global Financial Wellbeing Study (2018) found that less than 35% of employers say they have no or very low understanding of financial wellbeing.
Workplace financial wellbeing not only helps employees understand specific financial products, but also helps them form better habits around managing money. When the OECD looked at financial literacy across the world, they found that most people don’t understand the basics of money, such as comparing the price of loose vegetables to packaged ones, identifying a scam email and what can affect insurance. These are not related to regional benefit or retirement differences, they are global issues around how money is understood and managed.
There can be huge variations between how different financial products operate in individual countries, so employers should focus on giving their employees the tools to make better, informed decisions. This means creating a global financial wellbeing strategy that can then link into local products and regulation at country level. This is especially effective when used in parallel with a global benefits strategy.
A great example of how we can do this is if we look at retirement: what happens when we retire, and what support is state-provided differs hugely across the world. If you are a pensioner in the Netherlands or Turkey, you will receive more than 100% of a working wage in retirement. If you retire in Croatia, you could get as much as 129%. In fact, despite the significant attention we pay to pensions in this country, the UK has the lowest state pension in the developed world, according to the OECD’s Pensions at a Glance (2017) report.
The consistent message from every country is that as people live longer governments can’t continue to sustain these levels of state support, and so pressure is being put on employees to start saving more to secure their own retirement. Whether you are making compulsory contributions to your Central Provident Fund in Singapore or your superannuation ‘Age Pension’ in Australia, employers are encouraging their staff to start saving as early as possible and contribute as much as they can.
There’s a huge set of choices employees need to make to understand how much income they will need in retirement – from when they want to retire to where they will retire. Employers can ensure their employees are equipped with the skills and information to fully understand what these choices are and the language/programmes used eg how compound interest works.
A global financial wellbeing strategy can then link to regional employee benefits schemes to help employees in any country understand the specifics of their retirement plans. This way they have everything they need to understand the importance of saving for retirement, make a plan and start saving.
All around the world, employees report needing more help in saving money, budgeting, paying off debt and setting goals. How employees do this is more to do with psychology and education than regional differences. For example, there is no international credit rating system. Each country has their own set of providers that broadly operate in the same way. So it’s important that we globally raise awareness of credit rating, what it is, how it works, while at the same time providing regional specific information. The same applies to lending. Whether it’s APR in the UK or JPR in Japan, employees need to be able to understand not just terminology, but percentages and certain mathematics techniques, to make comparisons when borrowing money.
When employees take part in good workplace financial education, they not only show improved financial knowledge, but their behaviour changes. In some cases, this has led to increased retirement savings.
Employers that operate in multiple countries should look to utilise their employee benefits platform to deliver financial wellbeing as much as possible. These systems are already tailored regionally and are already the place your employees are going to make big financial decisions.
As with any global strategy, the key to financial wellbeing’s success in your workplace is to globalise your aims and processes, while regionalising the assistance and experience.
The author is Gethin Nadin, director of employee wellbeing – Benefex.
This article is provided by Benefex.
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