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Companies to take a greater role in helping employees achieve financial security

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COMPANIES TO TAKE A GREATER ROLE IN HELPING EMPLOYEES ACHIEVE FINANCIAL SECURITY

Employers are likely to take a greater role in future in helping employees with their personal financial planning, according to a survey conducted by consultants Watson Wyatt. The survey found that 73% of large UK employers want to offer financial education and planning assistance to their staff.

One of the main drivers is a concern by 58% of employers that many people may not have adequate retirement income if they are not encouraged to make better financial choices. This finding is supported by a parallel survey of employees, 85% of whom say that within the next 15 years pensions alone would be inadequate and people will have to find additional ways to fund for their retirement.

Companies also say they want to improve the perception of the employee reward/benefits package they offer (suggested by 70% of employers) and to obtain greater value from the money they spend providing these benefits (33%). Indeed, only 18% of employers feel that they are getting full value from the employee benefits they currently provide. 

Gary Smith, a senior consultant at Watson Wyatt, said: “While many companies care for the welfare of their staff, this growing interest in providing personal financial planning is not old-fashioned paternalism. For example, if significant numbers of people cannot afford to retire because of poor financial planning, this is likely to create significant workforce management problems in terms of productivity, succession planning and talent management.”

According to Watson Wyatt, employers also recognise that people today have more complex financial lives than in the past and they are looking to tailor employee benefits packages to reflect that. The survey finds that 63% of employers believe that in the next 15 years they will offer employees a wider range of savings and investment opportunities to employees.

Employers: we should offer more financial education or assistance to help employees manage their finances:

  • Strongly disagree – 3.0%
  • Disagree – 9.1%
  • Neither – 15.2%
  • Agree – 60.8%
  • Strongly agree – 12.1%

Employers: my employees are not saving enough for their retirement:

  • Strongly disagree – 6.1%
  • Disagree – 15.2%
  • Neither – 21.2%
  • Agree – 54.5%
  • Strongly agree – 3.0%

Employees: in the next 15 years pensions will be inadequate and people will have to fund their retirements in other ways:

  • Strongly disagree – 1.4%
  • Disagree – 3.8%
  • Neither – 9.6%
  • Agree – 48.0%
  • Strongly agree – 37.1%

Smith concluded. “Free or cheap advice usually means the opposite. Commission-driven advice too often results in inappropriate product-driven sales, high charges and – significantly in this context – the workplace benefits usually being underrated. Providing employees with access to truly impartial advice and guidance can be highly cost effective and add real value to employees and consequently employers.” 

 

 

 

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