How to ensure employees are saving for retirement despite cost of living pressures
The biggest challenge many employees face when planning their financial future is having enough money to cover their daily expenses – let alone setting money aside for retirement.
According to interviews by Pluxee UK involving more than 2,000 UK employees for its new eBook Money Mastery: Proactive and Affordable Steps to Enhance Employee Wellbeing, 30% admitted to not having any emergency funds. Furthermore, almost one-quarter (24%) said they have no savings or savings goals.
Lack of disposable income is an underlying issue, preventing many from setting money aside, but lack of education and awareness also plays a part.
Empowering employees to plan
Knowledge is always power – and the truth is many employees lack financial information and knowhow.
In the UK, employers are legally obliged to offer a workplace pension scheme. Pensions are one of the best ways to help employees plan and save for their future, but it’s down to employees whether to opt in.
There are many reasons why an employee may choose not to enrol in their employer’s pension scheme. It could be due to age – retirement isn’t a priority – the need to make every penny count today, and a lack of understanding about why planning for the future as early as possible is essential.
In Money Mastery, Pluxee UK highlights that 57% of its employee respondents said they wanted their employer to provide access to financial education and advice.
It’s clear that it isn’t enough to make a pension scheme available; employees also need financial education and advice to empower them to make the best decisions.
With over half (52%) of employees agreeing that employers have a duty of care over employee wellbeing, there is clearly a level of expectation that organisations provide some guidance on financial matters.
Show me the money
Pensions aren’t the only way to set money aside for the future and many employees need more than education: they need disposable funds. Employee benefits play a crucial role in creating savvy savers with the means to set money aside.
Employee discount platforms, cashback schemes, salary sacrifice, and salary deduct schemes and products help stretch employees’ wages. Salary sacrifice, saves both employees and businesses money on NIC and tax payments.
When the day-to-day is more affordable, employees have more freedom to set funds aside for the future.
Financial resilience is another key factor. The Covid-19 pandemic and cost-of-living crisis demonstrate that nothing is permanent: preparing for the worst is vital.
Financially resilient employees can withstand unexpected economic events without affecting their spending habits and way of life – including their ability to save for retirement.
There are many elements to creating financially resilient employees, including education and money-saving benefits, but it doesn’t end there.
Employers can offer a lifeline to employees in debt or without the credit score needed to get a competitive loan. Financial wellbeing tools that enable employers to consolidate employee debts into manageable monthly repayments are available, and so is the option to grant employees a loan.
Employer-funded loans make it more affordable for employees to pay for things they need and get out of debt, relieving financial anxieties and enhancing their mental health. Better still, once the loan repayments are complete, you can encourage employees to continue deducting the monthly amount from their wages - only this time, they’ll be funding a savings pot, setting them up for the future.
In partnership with Pluxee UK
Pluxee UK, is a leading employee benefits and engagement partner that opens up a world of opportunities to help people enjoy more of what really matters in their lives.
