New research of almost 200 companies representing over 1.5 million employees, has found that many workplaces are increasingly recognising poor financial literacy as a key financial wellbeing risk for their employees (63% compared to 58% in 2022 research*).
The Financial Wellbeing Research 2023**, carried out by The Reward & Employee Benefits Association (REBA) in association with WEALTH at work, a leading financial wellbeing and retirement specialist, is the second in its series of workplace research.
Risks to financial wellbeing
It found that employers expect financial pressures such as high energy prices (77%), consumer inflation (75%), childcare costs (64%), rental costs (66%) to continue to be a risk to the financial wellbeing of their staff. Although, energy costs and consumer inflation are notably less of a concern than last year (91% reported high energy prices and 81% reported consumer inflation as risks in 2022). More than half (53%) of respondents say they plan to increase financial wellbeing spend.
The survey also found that employers view supporting the ageing workforce as increasingly important. 44% say that they plan to offer targeted support for the over 55s over the next two years, which has grown from 17% from two years ago, an increase of 159%. Specifically, pre-retirement planning is set for a boost with 68% of employers either currently offering or planning to do so. These findings may be due to concerns over eligible employees accessing their pension early, as 17% of employers reported that this will also be a driver of future change.
Another notable focus for employers will be tackling financial distress in the workplace. The survey found that 44% say that it will be a driver of change in the next two years.
Jonathan Watts-Lay, Director, WEALTH at work, comments; “As people continue to feel the impact of rising costs they need immediate support with their day-to-day needs, but also help with longer-term needs such as savings, pensions and preparing for retirement, especially for those considering accessing their pension early.”
He adds; “It’s well known that when you do not fully understand your finances and how to address current difficulties and potential risks, it can result in stress. A lack of understanding of finances could also result in you making poor decisions which can prove very costly, especially at retirement. Improving your understanding of the financial issues which affect you is key to improving your financial situation. Speak to your employer to understand what support is available, as well as how to access and make the most of it.”
Getting financial wellbeing support in the workplace
Overall, the research found that workplaces recognise that financial wellbeing is important for improving wider employee wellbeing (96%).
It found that support is growing for savings products. Employers offer or plan to offer in the next two years, pay as you earn saving schemes such as help-to-save and opt-in payroll savings (34%), employee share plans (42%), tax free saving wrappers including ISAs (45%), and long-term incentive plans (54%). Wage advance schemes are also rising in popularity, with 37% set to offer this within the next couple of years.
The number of employers offering independent financial education, guidance, and advice is set to almost double. Employers offer or plan to offer in the next two years, financial education from an independent provider (62%), financial guidance (67%), and advice on general finances (56%), or advice specific to retirement (60%). In fact, financial coaching is also set for significant growth – 12% of employers currently offer it but 41% plan to within the next couple of years – a 141% increase.
Jonathan Watts-Lay, Director, WEALTH at work, comments; “It’s good to see that many employer’s are now focused on helping employees by providing them with tools to better manage their money, and support is growing for savings products to build financial resilience.”
He warns; “However, it is concerning that wage advance schemes are rising in popularity. Whilst they may be suitable to help in an emergency cost such as urgent car repairs, they are not a long term solution to financial problems. They should always be offered alongside financial education, so that employees understand this.”
Watts-Lay adds; “Of course, 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 with your finances. So it’s good news is that support for financial education from an independent provider, guidance and advice is increasing.
These services should help employees better manage their finances including how to manage a budget, debt, save for life events, and eventually, how to prepare for retirement.”
He comments; “However, it’s important that employees find out what support is available, as well as how to access it and make the most of it.”
To read the full copy of the report, please click here.