Why employers need to beware of the age trap when setting up financial benefits choices
One of my family members was made redundant two years ago. He was 27 years old at the time and it took him more than six months to secure another job. During this time he managed to increase both his overdraft and credit card limits in order to cover basic month-to-month commitments. He did not have sufficient short-term savings or access to other emergency funds and soon found himself over-indebted. It’s a situation he is still struggling with today.*
Someone else I know, an ex-colleague, recently decided at age 48 to change her career. She was a City high flyer when she realised her work wasn’t as fulfilling as she had hoped it would be. She had a career change so that she could work with underprivileged kids. This not only meant a significant cut in take-home pay but it also exposed her lack of experience of working to a tight personal budget and carefully planning her finances in order to adjust her lifestyle to her new choice in career. Last I checked she was still grappling with these challenges.
What makes this interesting is that whilst the two people I describe represent different generations, their financial situation is based on circumstance and not generational divide or stereotype.
These events or circumstances could easily have been reversed. The point is, the more closely we look, the more we find that there is a flaw in trying to group financial benefits by generational need.
So what about my friends? Do their particular financial needs fit inside any crudely defined boxes? Of course not. And neither therefore should any proposed solutions.
What is important is a proper in-depth analysis of the financial wellbeing needs of employees, so that employers actually understand their requirements and are not left making assumptions, particularly generational ones. The best financial benefit, or intervention, is the one that is not bound by generation but applicable across all age groups.
For example, if both my friends were working for the same employer, that employer might want to consider offering a financial wellbeing program that addressed their needs. Perhaps that could be an easily accessible employee loan at an attractive interest rate (conceivably not found elsewhere) and a programme of financial education, or even an app/other digital tool that could assist with budgeting and financial planning. These are benefits that both employees are likely to make use of.
My friends might even find themselves in a similar boat to other employees and it is here where communication becomes key and where generational divide is more likely to be seen in the way different generations prefer to access and absorb information.
For some time now we have been tailoring pension communication to suit different generations, in terms of style and language. For example, whilst some might enthusiastically engage in corporate social media discussion via a local intranet, not all people would feel comfortable with this and it is important that communications target all cohorts to ensure inclusivity. It is no different when it comes to the provision of wider financial wellbeing where reasonably safe assumptions around effective communications by generational grouping can be made, unless of course there exists data to support the delivery of communication in a more bespoke manner.
The benefit choice offered, therefore, is less dependent on generation and more likely to be determined by fully understanding the needs and financial requirements of the workforce (irrespective of generation), through structured analysis. Yes, different WAYS of offering the same benefit do exist but they are usually part of the offering or the product itself. This means that the only distinction left to make, from an employer point of view, is how suitable benefits are communicated – and how they might be targeted to different generations.
*Barnett Waddingham’s recent survey - Generation Why? (Money Matters in 2018) – found that only 40% of employees currently have emergency savings that will last them longer than 3 months were they to lose their job.
The author is Riaan van Wyk, Workplace Wellbeing Consultant at Barnett Waddingham.
This article is provided by Barnett Waddingham.
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