How financial wellbeing strategy is shifting to meet workforce demands
New research released last month highlights some of the barriers to improving financial wellbeing support, the current risks employees face, as well as the drivers of future change.
The report, from the Reward & Employee Benefits Association (REBA) in association with WEALTH at work and covering 236 companies, representing 1.3 million employees, also examines future trends.
Barriers to improving financial wellbeing
Over three-quarters (76%) of employers think a barrier to improving financial wellbeing support in the workplace is employees not knowing where to start when asking for help.
Other barriers include support not being joined-up (72%), lack of communications (69%) and a lack of take up of existing financial wellbeing support (59%). Over two-fifths (41%) of employers say that a barrier is that existing support is unsuitable for employee needs.
Risks to employee financial wellbeing
The research found that employers expect financial pressures such as inflation (76%) as well as costs impacting working parents such as childcare (73%), rental costs (64%), carer costs including eldercare (46%), high interest rates on mortgages (58%) and high energy prices (58%) will continue to be a risk to the financial wellbeing of staff.
In fact, 53% of employers say the increased cost of living will be a driver of change for future financial wellbeing support.
Other financial wellbeing risks high on the list for employers include insufficient retirement savings (71%) and a lack of financial literacy (62%).
Driving change
The survey found factors such as ESG affecting attitudes to savings (42%) and the ageing population (41%) are growing drivers of future change.
Whilst factors such as mental wellbeing (70%) and poor financial literacy (31%) remain key drivers for change.
Overall, the research revealed that the workplace recognises internal demands such as benchmarking against competitors (57%), building a sustainable and resilient workforce (56%), attracting talent (56%), retaining employees (55%), as well as the need to streamline financial wellbeing benefits (52%) as key drivers for future change.
Jonathan Watts-Lay, director, WEALTH at work, said; “It’s really important that employers check that financial wellbeing provision is suitable and effective for their workforce and that employees know how to access it.
“This help needs to be balanced around longer-term needs e.g. the provision of savings through Workplace ISAs, as well as pensions savings and preparing for retirement.
“It’s also well known that when employees do not fully understand their finances and how to address current difficulties, it can result in stress,” added Watts-Lay.
The future of financial wellbeing provision
To combat these concerns, almost half of employers (49%) plan to make changes to their financial wellbeing offerings in the next two years.
In fact, the research found that over a third (35%) of employers say they plan to increase financial wellbeing spend, and 82% are set to offer financial wellbeing programmes within the next two years.
Specifically, employers plan to offer financial education from an independent provider (47%), financial coaching e.g. one-to-one guidance (43%), advice on general finances (47%), or advice specific to retirement (54%), as well as support with pre-retirement planning (60%).
Popular savings and benefits that will be offered by employers within the next couple of years include discount schemes (86%), travel season tickets (63%), debt support (41%), employee share plans (38%) and mortgage broking services (35%).
The provision of tax-free saving wrappers including ISAs is set to more than double (from 14% to 30%).
Education is key
Measuring financial wellbeing is also going to be key, with 73% of employers planning on measuring the effectiveness of their benefits in the future.
Watts-Lay said: “Financial education is the key element which underpins all financial wellbeing initiatives. After all, financial wellbeing is about being able to make informed choices about your finances, no matter what life event you may be experiencing.
“Offering a range of financial wellbeing benefits which are aligned in strategy should help employees feel financially secure whether they are a new parent managing childcare costs, saving for a first home, or planning for retirement.”
Debi O’Donovan, director, REBA, added; “Rethinking how we work, live, save and spend when our total earning lives are likely to span about sixty years calls into question why we focus almost single-mindedly on saving harder into pensions in order to completely retire before or in our sixties.
“Given that cliff-edge retirements are on their way out, effective workplace financial offerings therefore, are likely to shift too.
“This research demonstrates that major life events such as buying a house or becoming a parent are becoming increasingly acknowledged by employers, not least because of the way related money pressures distract from work or cause valued employees to leave,” added O’Donovan.
To read the full copy of the report, click here.
In partnership with WEALTH at work
WEALTH at work is a leading financial wellbeing and retirement specialist - helping those in the workplace to improve their financial future.
