How to help reduce the impact of the coronavirus crisis with financial wellbeing
Given the unprecedented global impact of the coronavirus crisis, much of the workforce has been financially affected. Therefore, providing financial wellbeing has never been so important, especially for those employees considering retirement.
In these most uncertain of times, employees really need help and guidance, now more than ever. This will help them make more informed decisions on their finances. So, what can employers do to help?
Reaching out in a changing environment
Recent government guidelines introducing working from home measures mean that delivering financial education face-to-face has become impossible. Even as the rules relax, social distancing is likely to make things difficult for a period of time.
Therefore, it is important for employers to adapt to this changing environment, introducing other formats such as live webinars and telephone or video guidance calls, which can be an effective alternative.
Jonathan Watts-Lay, director at WEALTH at work, explains that financial education and guidance can be delivered in a number of different ways.
“Although the face-to-face seminar remains the most popular and effective method, especially for those considering retirement, other forms of communication are proving to be an effective alternative in this climate,” he says. “Offering a range of delivery methods can also ensure the majority of employees are always supported, whatever their needs”.
Reaching out directly to those at retirement
For those employees who are considering retirement or are about to retire, it is crucial that they have one-to-one support through financial guidance to help them understand their retirement income options. This also helps them to understand the pitfalls to avoid, including the scams out there which particularly target this group.
Financial guidance will also help employees to understand the longer term consequences and the tax implications should they decide to access their pension early, whilst continuing to work, to support what may be a reduction in their household income during the coronavirus pandemic. By explaining other options, for example, accessing taxable savings they may have or looking at what other support is available, including the coronavirus initiatives created such as mortgage holidays and debt deferral, it could help them to budget more easily which could benefit their retirement plans in the future.
For those about to retire with a DC pension, given the current turbulent market conditions, some may be tempted to cash out their pension completely. This needs careful consideration as there are serious implications of doing this, such as potentially generating a tax bill and transferring from a tax-free environment (the pension) into what may be a taxable environment.
“Whilst retirement planning is important regardless of the climate, it is particularly crucial when stock markets are volatile. It is really important that employees don’t take a knee-jerk reaction and make poor decisions. After all, it could be a decision that adversely impacts their retirement income for years to come that they may live to regret,” warns Watts-Lay.
Considering the impact of lower household income
Given the impact on household finances, we have specifically designed a webcast to help employees’ knowledge and understanding of their finances in these difficult times. The webcast is designed at a household level, so covers many of the initiatives which could impact a family, such as being furloughed or implications if a partner is self-employed. It also considers issues for those nearing retirement whose pension pot may have been significantly reduced as a result of the fall in stock markets. This webcast being provided free of charge.
“As the leading expert in our field, it was really important for us to be able to help and provide insight on the various initiatives available, ranging from mortgage holidays to debt repayment. We also look at key considerations for those who are suffering an income reduction in the household. The webcast will enable employees to understand some of the financial issues they may face. Given the circumstances, we decided to provide this free of charge,” says Watts-Lay.
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This article is provided by WEALTH at work.
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