Education, Education, Education.

Reward and WEALTH at work surveyed over 90 employers to learn more about their approach to financial education in the workplace.

Reward: A quarter of respondents say that they provide financial education for employees as they reach retirement, and 22% provide education for staff struggling with debt problems. But in many cases, there is very financial education at any other point in an employee’s life. How can employers extend the range of financial education that they currently offer?

Jonathan Watts-Lay, Director, WEALT at work (JWL): It is important to consider what people need to understand when they enter the workforce. It is everything from understanding their payslip, through to the benefits on offer.

When someone has been in work for twenty years, it’s a good opportunity to consider whether they should be increasing their pension contribution. There may be other savings vehicles within the workplace, such as save as you earn schemes, to consider.

Ten years out from retirement there’s an opportunity to help people understand their options and whether they are likely to want to go into drawdown or buy an annuity, and therefore put them on the right investment strategy for that glide path.

As well as life stages, there are events. The annual window when employees must decide what benefits they would like to take for the coming year is one such event. Research shows that often benefit take-up in many areas can be really low. In such circumstances, employers should assess whether it is because people do not understand the value of the benefits or whether the benefits are unsuited to the workforce, and act accordingly.

Reward: 60% of survey respondents do not analyse their workforce to understand their financial education needs, and 81% do not have a formal financial wellbeing strategy. How can companies get started when it comes to introducing financial wellbeing and analysing the workforce?

JWL: We have conducted focus groups with different cohorts of employees in the past and often the starting point is to talk through the existing benefits that are available, because you would be amazed at how many people do not understand what’s on offer.

We characterise different financial wellbeing initiatives as “push and pull” strategies. There are certain benefits that reward teams may want to push out to people to make sure they really understand them. A good example might be the launch of a Save As You Earn scheme. There, employers should explain what the scheme is, how it works, and what benefits are so they can decide whether to join the scheme. So that’s a push strategy, with the employer pushing that out to the employees.

Pull strategies probably work better on issues like debt management because you can’t really go out and say to your staff “Oh if you’ve got some debt problems let us know,” because it’s a bit too personal. There, it’s better to make digital resourcing available – so it might be simplistic steps that they could take themselves, like debt consolidation of credit cards, through to more serious support, such as debt counselling.

Reward: 88% of respondents said that they have an employee assistance programme with debt support. What are some of the pros and cons of an EAP as a form of financial wellbeing support?

JWL: EAP systems should be a safety net, rather than the first thing you arrive at as an employee. Wellbeing strategies should be preventative; they should help employees identify that they have an issue with debt and signpost that there are resources available. The EAP should be there if everything goes badly wrong.

The data show that people with financial stress are less productive. As the EAP is often a last resort, there is a good chance the business has already suffered from a lack of productivity. Therefore, there is a commercial argument in favour of helping people before they reach the point where they need an EAP.