12 Aug 2015

Future vs immediate financial security – how much should employers do?

In this series of articles about our six pillars of employee wellbeing, we will be discussing the second pillar – financial security - in more detail.

Employers only tended to engage with their employees in terms of their financial security in one area - pensions. Pensions, in theory providing later life financial security, have long been the primary focus of employers because, in the main, legislation (certainly since the turn of the century) has dictated that they must address this one area.

However, immediate financial security is a major worry and it is this that causes stress and can severely impact employees performance and productivity. Future financial security is important but it is worth asking whether employees are as concerned about an event 20, 30 or 40 years away?

Importantly, should employers really be unduly concerned about the future financial security of their employees above legislative minimums when the majority of their workforce are unlikely to retire with their company?

This all lends support to the suggestion that employers should focus more on the financial issues facing their employees in the here and now, such as student debt, lifestyle problem debt or buying a first home.

However, can employers really be expected to provide support to their employees?

We are not suggesting that employers actively re-finance employee debt or provide deposits for first time buyers, as this would be unrealistic, but employers can support their employees through guidance and self-help.

At Barnett Waddingham we have invested heavily in our Me2 engagement tool which provides employees with a sophisticated but targeted pension tool while also providing advice around debt management, the soon to be governments help to buy scheme and other sources of information relevant to an employee’s immediate financial issues.

Without immediate financial concerns being resolved, employees are much less likely to be able to contribute sufficiently to their own retirement making a decent retirement beyond their reach. This has a direct impact on employers as workers who cannot afford to retire will continue to work beyond retirement, effectively preventing employers from replenishing their workforce.

Without doubt financial security is an area that requires real attention now with clear benefits to the employer and employee when its importance is deemed high across a workforce.

This article was provided by Barnett Waddingham.