Reports from a variety of sources reveal a startling level of ignorance when it comes to people’s knowledge about pensions and financial planning for future retirement.
“What your staff do or do not know about their finances can impact on your business,” explains Philip. “Financial issues can be a major cause of workplace stress, leading to lost productivity.”
“Furthermore, giving your employees helpful advice and information adds value to them, helping you engage with them.”
What Employees Don’t Know
“There seems to be a considerable gap between expectation and reality. A recent survey, that the CIPD reported on, revealed that many younger employees have not anticipated a potential drop in living standards when they retire.”
“There is a general failure to engage with financial planning on a meaningful level.”
Research from Fairstone, one of the UK’s largest chartered financial planning firms, reveals that 52% of those surveyed had no retirement plan in place.
“Employees are not well informed about the impact of finances on their future, which extends from their unawareness of their pensions’ value to a general lack of engagement with financial planning”
“The implications are serious, for an economy where there is an increasingly older population.”
“A quarter of self-employed people say they’ll probably never retire. Health-wise they might not have a choice.”
What Should Employers Do?
Should it matter to employers whether their employees are aware of how pensions work, or if they are prepared for retirement?
“The CBI has pointed out that the UK is facing a personal savings crisis. Financial stress can have a serious impact on performance at work. Plus, a low uptake of workplace benefits can make planning retirement dates overly complicated.”
“Whether an employer feels they have a duty of care regarding their employees’ financial education, they can feel the impact of a lack of planning as staff engagement suffers, as does retention and productivity”
“It is in the best interests of employers, the people who work for them, and for the wider economy, that awareness of personal finances becomes much more widespread.”
“Business can help lead a cultural change, where people take a systematic approach to retirement planning, based on a sound understanding of how pensions work, and what they will need to live on comfortably.”
Like other essentials, businesses can bring in external, specialist advice to do this, commissioning the services of a professional, independent training company.
“The CBI reports that two-thirds of employers already think they have a joint responsibility, alongside staff, to improve their employees’ financial wellbeing,” concludes Philip. “Improving their financial education is a vital early step towards making this happen.”