Three out of four employers agree that they need to take a more active role to support employees’ financial wellbeing following the pandemic, according to new research.
Willis Towers Watson’s Future of Financial Wellbeing report found this proportion believe employers want them to do more on this issue, while over a third (36 per cent) said the pandemic has had a negative impact on financial wellbeing of their employees.
But the report highlights an increasing disconnect between employees’ financial needs and their company benefit programmes. Whilst many employers report a mixture of issues facing employees – such as debt, short-term savings, housing and retirement savings – most admit they are only truly effective at supporting saving for retirement.
When it comes to retirement savings nearly half of companies (47 per cent) acknowledge their employees face challenges, but nearly two-thirds (61 per cent) are confident their retirement savings provision is effective. Emergency savings, day-to-day living costs and debt are also identified as challenging areas for employees that are not adequately supported at the moment.
Willis Towers Watson financial wellbeing lead Richard Sweetman says: “Organisations realise employees are currently facing a wider array of financial challenges and are looking to evolve from a focus on helping employees save for retirement, to adopt broader financial wellbeing programmes that provide the help they need.
“Many employers are now accelerating their focus on financial wellbeing in response to Covid-19, and the associated economic impacts.”
Looking ahead, employer priorities for the next two years better reflect this. Half of employers surveyed said they plan to provide better emergency savings support, and a similar number recognise the importance of debt and day-to-day costs support.
Crucially, the focus on broader financial wellbeing is unlikely to come at the expense of retirement provision as four-in-five (79 per cent) employers said they also recognise the importance of greater support for retirement savings over the next two years.
Sweetman points out that debt and the challenge of meeting day-to-day living costs remains a crucial area to focus on. “We know from employee research that when these issues do come up, they have a particularly detrimental impact on mental health and wellbeing.”
The study also analyses the type of financial support currently offered by employers. General savings or investment accounts, corporate ISAs and Lifetime ISAs are currently offered by only a small number of employers but their importance is set to rise sharply over the next two years, with half of employers looking to introduce at least one additional type of workplace savings option within the next two years.
Financial education, guidance and advice is also widely viewed by employers as an important part of their financial wellbeing provision. Online educational resources are already provided by over half of employers, with a further third likely to introduce it in the next two years.
Sweetman adds: “With the importance of financial wellbeing in the workplace now acknowledged by most employers, the challenge organisations face is how to design and deliver a successful programme. Research on employee behaviour has shown that simply providing more options to employees is unlikely to be successful if it is not supported by effective communication and decision support.
“A well-structured financial wellbeing programme will not just provide tools and apps but also coaching, seminars and guidance for employees, to help them make better financial choices. To be most effective, programmes need to relate to individuals’ circumstances and be communicated at moments in time most relevant to the employee.”
