Just 40 per cent of UK workers are confident they have chosen the right savings product, as a third are saving less than £50 a month and 20 per cent not saving anything at all, new research shows.
A study carried out on behalf of Close Brothers and the Pension and Lifetime Savings Association (PLSA) has found 65 per cent of employers recognise that they have a key role to play in improving employees’ financial wellbeing, but 75 per cent of employees say that their employer has not provided any financial education to help them understand what savings choices exist.
The report concludes that a lack of across the board financial education is failing to close the employee savings gap.
While more 53 per cent of those aged 18-34 see either saving for retirement or buying a house as their main savings priorities, of those eligible to save via a Lifetime Isa, 42 per cent don’t do so because they feel that they don’t know enough about the product.
The research found 65 per cent of employers think the responsibility for improving employees’ financial wellbeing lies jointly with them and their employees, just 48 per cent offer some form of financial education, with 20 per cent planning to introduce it in the next 12 months.
Despite this, 75 per cent of employees say that their employer has failed to provide any financial education to help them understand what savings choices exist and what is best for them. Meanwhile, 35 per cent of employees who had received financial education said that it had been useful in guiding their immediate, medium, and long-term saving decisions.
Close Brothers head of financial education Jeanette Makings says: “There is a looming savings crisis. Not only are people failing to save enough, but many simply don’t understand the different savings choices available or how to evaluate which ones are best for them. Worse than that, the industry is not geared up to help them. Product providers can explain their own products, and comparison websites may be helpful to compare products of the same type, but there are very few providers able to help individuals look across the savings landscape in its entirety and choose what’s best for them.
“Employers have a key role to play in solving this lifetime savings challenge, but despite them seeing it as their responsibility to enhance the financial education of their workforce, far too few are adequately addressing the issue amongst their employees. If we want employers to be adding real value, their efforts need to reflect the challenges that individual employees are facing at each stage of life.”
PLSA deputy director of DC, lifetime savings and research Nigel Peaple says: “Regular income from full-time employment is the building block for many people’s financial stability so it makes sense that they would also look to their employers for support with financial education, pensions and lifetime saving. Today’s report highlights not only the low levels of saving amongst the workforce but also their interest and desire to do more.
“It also raises important questions about the role employers can play in helping employees to be financially prepared for retirement. It is encouraging to see that almost two thirds of employers believe that it is their responsibility to help employees to make the most of the benefits packages they offer. We hope that companies will feel able to help their employees reach their savings aspirations.”