Pension Communications | Insights
Francis Goss , Director, Organisational Wellbeing Consulting
22 Nov, 2020 · 4 -minute read

Financial wellbeing: a state of being in which a person can fully meet current and ongoing financial obligations, feels secure in their financial future, and can make choices that allow enjoyment in life.1

Now that’s what you call a life goal. But it’s a goal that feels out of reach for many people in the wake of the coronavirus pandemic.

According to the latest Salary Finance report2, 36% of UK employees have financial worries, with 29% regularly running out of money before pay day, and 41% naming money as their greatest cause of stress in life - above relationships, career, and health.

And with 49% of employees feeling that their employer neither cares about nor is supportive of their financial health3, the question is: what are you going to do about it?

The three Cs

Part 1: Confidence Do your employees feel empowered to make informed decisions about money?

Part 2: Control Are they equipped to manage everyday budgeting, spending, saving, and debt?

Part 3: Capacity Are they in a position to absorb a financial shock, such as an emergency cost or redundancy?

Employees who are confident, in control and have the capacity to take a financial hit, have lower money stress. Conversely, a lack of confidence, control and capacity leads to higher stress – and the associated mental health challenges that come with it.

And let’s not fall into the trap of jumping to the conclusion that those with higher earnings automatically have fewer financial worries. While it’s certainly true that the highest level of financial worries lie with low earners, it’s ultimately about a person’s attitude to money - not how much they get paid.

And this is why it’s vital that organisations take as broad an approach as possible to financial education – it’s something that everyone needs, regardless of the size of their bank balance!

So how can you, as an employer, adapt your financial wellbeing strategy to meet the differing needs of your employees? It’s all about financial education.

Knowledge builds confidence, planning helps to create a sense of control, and a savings buffer helps to absorb a financial shock.

Knowledge is power

It’s widely recognised that knowledge builds confidence, planning helps to create a sense of control, and a savings buffer helps to absorb a financial shock; which, of course, means that knowledge building, budget planning and savings support should be at the top of your agenda.

But it’s not all on you as an employer. To achieve an improvement in financial wellbeing, employees have to take responsibility for themselves. Like physical wellbeing, it’s not enough that people just know that they’re unfit or think about going to the gym – they have to take positive action too.

Providing your employees with a personalised financial wellbeing action plan based on their individual circumstances is the most effective way to adapt a financial wellbeing strategy to meet their needs.

It goes without saying that these financial needs will differ according to the stage of life the individual in question is at. For example, a recent graduate probably won’t see retirement planning as a priority (even though they should!), but an employee with a long service history will be more likely to engage with communications from their pension provider.

This is why a ‘one-size-fits-all’ approach to financial wellbeing won’t cut it – targeted intervention based on each employee’s personal circumstances is what this is all about.

And, despite the challenges of the last 12 months, the good news is that employers can take positive steps to improve their employees’ financial wellbeing.

How you can help your employees

Grow their knowledge – and make learning accessible

There are some really great – really FREE - knowledge-building resources out there that cover money basics, debt, savings, and tax. The Money Advice Service website is a great place to start – and its Facebook group takes this resource to a platform that most people are comfortable with.

Promote your employee benefits

Many employees don’t fully appreciate or understand the money saving benefits on offer to them at work. Do something about this – it’s YOUR responsibility as an employer. Refresh your benefits communications, run a virtual benefits roadshow, and create a network of employee champions to promote your money-saving benefits.

Be supportive

Talking about personal finances isn’t easy – especially for those with low financial wellbeing. Employees that are struggling with debt will benefit from professional help, so make sure they know about the many debt support organisations available - and ensure that your Employee Assistance Programme has a robust support network in place too.

Give them time to act

Why not start a regular ‘Money Hour’ where your people can dedicate their time to financial wellbeing? This approach really works - a leading engineering firm recently sent their pension scheme members a sachet of coffee, encouraging them to ‘have a cuppa on us’ and focus on their financial future. The positive results spoke for themselves.

Provide the tools for the job

Encourage good habits - and make it engaging. From workplace savings schemes to retirement planning, there are some great modelling tools available to help your employees to make informed decisions about their money.

Sources: 1US Federal Consumer Financial Protection Bureau; 2THE EMPLOYER’S GUIDE TO FINANCIAL WELLBEING 2019-20; 3Employee wellbeing - the state of the nation's financial health

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