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Many people and businesses have been in a pretty grim place for the last year and a half – be that physically, emotionally or financially. Employers have gone the extra mile to check-in on their employees and ensure that they were safe and well, while also ensuring they were able to do their jobs under the pressure of pandemic circumstances.
As a result, many employers have focused on health and wellbeing in the last year – and quite rightly so. There are numerous studies that show a correlation between employee wellbeing and performance. It seems one of the keys to not only attracting and retaining talented workers, but also having a more productive, engaged and pragmatic workforce is positive employee wellbeing and happiness.
But as we know the root cause of many health and wellbeing problems faced by employees is financial worry and stress. So as workplaces start to recover from the chaos, return to a slightly different way of working and appreciating the benefits of a vaccine, attention is likely to remain on wellbeing. But maybe it’s time employers turn this attention to employee financial wellbeing.
The Aegon Financial Wellbeing Index set out to measure peoples’ objective financial position, covering factors including household income, debt, savings levels and other assets. Crucially it also asked people about money mindset, including the extent to which they knew what gave them joy and purpose, whether they had considered their future self, the social comparisons they make regarding money and whether they have put in place financial plans.
The report found that 40% of the population have less than £100 left at the end of the month, around a third don’t have any emergency savings and just one in ten people pay more than the auto-enrolment minimum of 8% of qualifying earnings into their workplace pension.
However, interestingly we also found that for all but the lowest earners, the area they could improve most on was mindset. Peoples’ mindset scores increased relative to their income, but not to the extent you would expect.
For example, two fifths of people have only a vague idea of where they want to be financially in 10 years’ time versus 29% with a specific idea. More than a quarter of us have not thought about what it is that gives us joy and purpose – which are essential ingredients to happiness and without a clear idea it’s difficult to prioritise financial decisions. Similarly, almost nine in ten of us don’t have a financial plan to achieve long-term goals and one in six of us frequently compare ourselves to those who are better off than us.
How can employers help improve employee financial wellbeing?
Products and tools are a common place to start but they are most effective when promoted through engaging events and supported by financial education and expertise in the form of financial advice and guidance.
To support the in-depth findings of the Aegon Financial Wellbeing report, Aegon has recently launched a Financial Wellbeing Tool that employers can share with their employees. It provides them with insight to their own financial wellbeing and tips on how to improve it. Notably, that’s not just tips and techniques that address the money side; but also those that address the mindset side – which seems to be the key to facilitate behaviour change.
This research and tool extends Aegon’s suite of engaging digital support which includes the Aegon UK app, video pension summaries, the digital hubs and Member Insights to make it easier for employers to engage their employees in saving for retirement.
And as employers have made remarkable efforts to help employees with their mental and physical wellbeing in the last year, it’s only natural they would step in to help employees in the workplace to improve their financial wellbeing as well.
After all it makes sense, better financial wellbeing of employees will improve their engagement, which will in time convert to better results for their business.
To find out more, visit aegon.co.uk/financialwellbeing